September 14, 2015

Southern Pastures, the largest institutional New Zealand farmland fund manager, has launched its second New Zealand dairy farmland and farming fund following the success of its first dairy fund.

From inception Southern Pastures has focused on pastoral dairy farmland for institutional investors, in particular pension and endowment funds. The focus on dairy is due to the unique role that dairy plays in the increasing global demand for protein, according to Prem Maan, Managing Director/CEO and a founding partner of Southern Pastures.

“The pure institutional focus will be maintained to ensure genuine alignment of long-term aspirations,” Maan explained in an exclusive interview with Global AgInvesting News.

He adds, “We got all the basics right in Fund 1 with our unwavering pure dairy focus, institutional quality world-class investing, a long-term horizon rather than a pre-defined term, the highest standard ESG policies and practices, and with our best-in-class fund structure that provides ease of ‘plug-and-play’ for prudent institutional investors.

“Investors find our proven expertise and focus on generating alpha through best-practice and hands-on management appealing. We do not rely on passive beta to deliver returns. This makes Southern Pastures attractive even to investors who already have an allocation to passive farmland strategies.”

When considering global milk price volatility and the timing of the fund, Mr. Maan said, “The key to making attractive returns in dairy is having the ability to navigate the downturns whilst positioning the business to capitalise on the inevitable upturns.”

Southern Pastures’ low-cost farming systems benefit from New Zealand’s benign temperate climate and plentiful water that enables grass-fed, free-range and animal-welfare based farming.

“Institutional investors understand the logic of our model. The long-term thematics and value proposition are more important than any particular market entry timing,” explains Maan.

“In any case, we believe that we are approaching the trough in the market cycle and as such there could be some exceptional opportunities for Fund 2 to invest in going forward.”

Investing in farmland is becoming increasingly popular with institutional investors as part of a diversified portfolio given its low correlation to other asset classes and inflation hedging characteristics.

Southern Pastures is a signatory of UN PRI and Farmland Principles.