Investment Industry Stories | 4 July 2008
By Joyanta Acharjee
Private equity product to launch IPO in Q1 2009 and will invest in land and operate cattle and crop farms.
The rush to capitalise on booming food prices and agricultural commodities continues apace as Dexion Capital prepares to raise $270 million for a private equity fund which will invest in land, and operate cattle and crop farms around the world.
The announcement came after Schroders revealed this week that it plans to launch an agricultural farming product for institutional investors in the second half of this year.
Dexion’s vehicle, Global Farming Ltd - a private company domiciled in Guernsey - aims to own and manage farms which are operating in largely unsubsidised farming countries.
Dexion hopes to raise $70 million from a pre-IPO fund raising which is due to close at the end of July and $200 million from an IPO in the first quarter of next year.
The firm said the pre-IPO is ‘going well’ and has attracted 14 main investors, including Sovereign Wealth Funds, family offices and wealth managers.
Global Farming will be positioned to exploit potential developments such as changes to Australian and Russian GM crop regulations and a continuation of the global soft commodity and agricultural land bull market, Dexion said.
It is aiming for a 12 to 16 percent return per annum over 10 years, with potential for significant upside.
Asset management will be provided by Global Farming Advisers (GFA), while Dexion is responsible for capital raising and marketing.
Peter Hannen of GFA said: ‘We believe this is a value proposition of buying the most inexpensive productive farmland in the world and bringing it into development over time.
He told Thomson Investment Management News: ‘We are aiming to be the low cost producer of all our products and that’s why we’ve chosen this mix around the world - because these countries are the low cost producers in their chosen spheres - and since we don’t know what’s going to happen to the prices, we are going to be efficient low-cost farmers of natural products as much as we can.’
Hannen is the former chairman of mining group Celtic Resources, which was acquired by Russian metals group Severstal last year for around 162 million pounds. Alongside his financial services career, which includes sugar trading and managing family assets, he has forty year’s experience of farming in the UK, Australia and South America.
Robin Bowie, chairman of Dexion Capital, said: ‘When you’re looking for who can do this type of thing, it’s quite a tall order. We at Dexion Capital have looked at lots of different managers in this area but what we’ve found is they tend to be country or continent specific, and in many instances they are financiers trying to get to grips with farming operations.
‘We think that we have a very unusual offering because the team is qualified to execute it and because the strategy is global and diversified, which is what we believe the investors want.’
Global Farming will invest in South America, Australia and Russia.
Of the IPO proceeds, 37 percent will be invested in land to be used for livestock, 52 to 53 percent for crops and 8.5 percent in a land bank, with the balance as working capital.
‘We think that we straddle the developing lands in the northern hemisphere and the unsubsidised farming systems of the southern hemisphere. We’re not going to be in the EU, we’re not going to be in North America,’ Hannen added.
‘I’ve included Russian farmland in my global mix where I think we’re uniquely positioned to be able to execute asset management in Russia, with all the difficulties you can run across there.’
In making his selection, Hannen will avoid areas of subsidised land.
‘I like to look at pure markets and pure price and whenever you have subsidy systems - like in Europe and North America - it’s very difficult to tell what percentage of the land value is being supported by subsidised internal prices.’
Dexion Capital currently runs four London-listed fund of hedge funds, including the 1.5 billion pound Dexion Absolute and 150 million pound Dexion Trading funds.
By Joyanta Acharjee
Private equity product to launch IPO in Q1 2009 and will invest in land and operate cattle and crop farms.
The rush to capitalise on booming food prices and agricultural commodities continues apace as Dexion Capital prepares to raise $270 million for a private equity fund which will invest in land, and operate cattle and crop farms around the world.
The announcement came after Schroders revealed this week that it plans to launch an agricultural farming product for institutional investors in the second half of this year.
Dexion’s vehicle, Global Farming Ltd - a private company domiciled in Guernsey - aims to own and manage farms which are operating in largely unsubsidised farming countries.
Dexion hopes to raise $70 million from a pre-IPO fund raising which is due to close at the end of July and $200 million from an IPO in the first quarter of next year.
The firm said the pre-IPO is ‘going well’ and has attracted 14 main investors, including Sovereign Wealth Funds, family offices and wealth managers.
Global Farming will be positioned to exploit potential developments such as changes to Australian and Russian GM crop regulations and a continuation of the global soft commodity and agricultural land bull market, Dexion said.
It is aiming for a 12 to 16 percent return per annum over 10 years, with potential for significant upside.
Asset management will be provided by Global Farming Advisers (GFA), while Dexion is responsible for capital raising and marketing.
Peter Hannen of GFA said: ‘We believe this is a value proposition of buying the most inexpensive productive farmland in the world and bringing it into development over time.
He told Thomson Investment Management News: ‘We are aiming to be the low cost producer of all our products and that’s why we’ve chosen this mix around the world - because these countries are the low cost producers in their chosen spheres - and since we don’t know what’s going to happen to the prices, we are going to be efficient low-cost farmers of natural products as much as we can.’
Hannen is the former chairman of mining group Celtic Resources, which was acquired by Russian metals group Severstal last year for around 162 million pounds. Alongside his financial services career, which includes sugar trading and managing family assets, he has forty year’s experience of farming in the UK, Australia and South America.
Robin Bowie, chairman of Dexion Capital, said: ‘When you’re looking for who can do this type of thing, it’s quite a tall order. We at Dexion Capital have looked at lots of different managers in this area but what we’ve found is they tend to be country or continent specific, and in many instances they are financiers trying to get to grips with farming operations.
‘We think that we have a very unusual offering because the team is qualified to execute it and because the strategy is global and diversified, which is what we believe the investors want.’
Global Farming will invest in South America, Australia and Russia.
Of the IPO proceeds, 37 percent will be invested in land to be used for livestock, 52 to 53 percent for crops and 8.5 percent in a land bank, with the balance as working capital.
‘We think that we straddle the developing lands in the northern hemisphere and the unsubsidised farming systems of the southern hemisphere. We’re not going to be in the EU, we’re not going to be in North America,’ Hannen added.
‘I’ve included Russian farmland in my global mix where I think we’re uniquely positioned to be able to execute asset management in Russia, with all the difficulties you can run across there.’
In making his selection, Hannen will avoid areas of subsidised land.
‘I like to look at pure markets and pure price and whenever you have subsidy systems - like in Europe and North America - it’s very difficult to tell what percentage of the land value is being supported by subsidised internal prices.’
Dexion Capital currently runs four London-listed fund of hedge funds, including the 1.5 billion pound Dexion Absolute and 150 million pound Dexion Trading funds.
