Stock Journal | 18 November 2103
Global funds chase Australian farms
by MATTHEW CRANSTON
GLOBAL fund managers and some of the world's largest pension funds have bought more than $1.5 billion of agricultural land in Australia over the past three years.
"This is the asset class of kings and countries," said Laguna Bay Pastoral Company director, Tim Biggs. "It's a very old investment class and its very uncorrelated to other asset classes, which is why [the pension funds] are chasing it."
Mr Biggs and Laguna Bay Pastoral chief executive Tim McGavin have just pulled together the latest of these global pension fund rural land investments.
Last week, the Adveq Almond Trust – managed by Laguna Bay Pastoral and backed by Swiss, Danish and United States funds – agreed to pay $200 million for 12,000 hectares of almond groves in northern Victoria. It was the biggest rural land purchase in Australia since Cubbie Station was acquired by Chinese and Japanese interests this time last year.
The latest deal adds to an impressive list of some of the world's largest pension funds and fund managers who have now publicly disclosed over $1.5 billion in direct investment in Australian agricultural land over the last three years.
They include: two Swedish pension funds, Första AP-fonden and the Second Swedish National Pension Fund/AP2; the Dutch pension fund Algemene Pensioen Groep; Danish pension fund Danske; Swiss fund Adveq Real Assets Harvested Resources; Qatar's sovereign wealth fund; and several from Canada including the British Columbia Investment Management Corporation, BNY Mellon, the Ontario Municipal Employee Retirement System, and Quebec's CDPQ fund, Caisse de dépôt et placement du Québec.
"We have been on the road for three years. In the beginning, most of the funds we saw were interested in just being educated on the asset class," Mr Biggs said.
"Now the education process is complete and they have decided they like the concept."
For Laguna Bay Pastoral, which itself has backing from US-based Global Endowment Fund, the global funds are likely to increase their investment in agricultural land in Australia.
"I see a massive change in agriculture coming," Mr McGavin said.
He said there were two main types of capital wanting to invest.
"The first type is what I call real asset investors such as pensions, endowments and large family offices. This money is sophisticated, patient and attracted to the inflation protection offered in farmland," he said. The other is that which invests in the product produced from the land.
"I believe passionately that the best outcome is if we see the first category own the underlying land and accept a rental income stream."
He said the returns on land over the long term equate to those received over the last 500 years by royal families, adding that as food scarcity issues are likely to arise in the future, such land will rise in value too.
Some of the world's largest pension funds and fund managers have made over $1.5 billion in direct investment in Australian agricultural land over the last three years. They include: two Swedish pension funds, Första AP-fonden and the Second Swedish National Pension Fund/AP2; the Dutch pension fund Algemene Pensioen Groep; Danish pension fund Danske; Swiss fund Adveq Real Assets Harvested Resources; Qatar's sovereign wealth fund; and several from Canada including the British Columbia Investment Management Corporation, BNY Mellon, the Ontario Municipal Employee Retirement System, and Quebec's CDPQ fund, Caisse de dépôt et placement du Québec.
Global funds chase Australian farms
by MATTHEW CRANSTON
GLOBAL fund managers and some of the world's largest pension funds have bought more than $1.5 billion of agricultural land in Australia over the past three years.
"This is the asset class of kings and countries," said Laguna Bay Pastoral Company director, Tim Biggs. "It's a very old investment class and its very uncorrelated to other asset classes, which is why [the pension funds] are chasing it."
Mr Biggs and Laguna Bay Pastoral chief executive Tim McGavin have just pulled together the latest of these global pension fund rural land investments.
Last week, the Adveq Almond Trust – managed by Laguna Bay Pastoral and backed by Swiss, Danish and United States funds – agreed to pay $200 million for 12,000 hectares of almond groves in northern Victoria. It was the biggest rural land purchase in Australia since Cubbie Station was acquired by Chinese and Japanese interests this time last year.
The latest deal adds to an impressive list of some of the world's largest pension funds and fund managers who have now publicly disclosed over $1.5 billion in direct investment in Australian agricultural land over the last three years.
They include: two Swedish pension funds, Första AP-fonden and the Second Swedish National Pension Fund/AP2; the Dutch pension fund Algemene Pensioen Groep; Danish pension fund Danske; Swiss fund Adveq Real Assets Harvested Resources; Qatar's sovereign wealth fund; and several from Canada including the British Columbia Investment Management Corporation, BNY Mellon, the Ontario Municipal Employee Retirement System, and Quebec's CDPQ fund, Caisse de dépôt et placement du Québec.
"We have been on the road for three years. In the beginning, most of the funds we saw were interested in just being educated on the asset class," Mr Biggs said.
"Now the education process is complete and they have decided they like the concept."
For Laguna Bay Pastoral, which itself has backing from US-based Global Endowment Fund, the global funds are likely to increase their investment in agricultural land in Australia.
"I see a massive change in agriculture coming," Mr McGavin said.
He said there were two main types of capital wanting to invest.
"The first type is what I call real asset investors such as pensions, endowments and large family offices. This money is sophisticated, patient and attracted to the inflation protection offered in farmland," he said. The other is that which invests in the product produced from the land.
"I believe passionately that the best outcome is if we see the first category own the underlying land and accept a rental income stream."
He said the returns on land over the long term equate to those received over the last 500 years by royal families, adding that as food scarcity issues are likely to arise in the future, such land will rise in value too.
