In any given month, Wattle Partners meets with many different professionals offering a new investment product, idea or scheme. Most are a pass from us, but now and again some pique our interest. This month we met with Warrakirri Asset Management, who are launching a Diversified Agriculture Fund.
Whilst agricultural property has a tainted record in Australia, due primarily to the tax-driven Great Southern and Timbercorp schemes of the 2000’s, there is an increasing supply of investable opportunities run by professional operators in the industry. Warrakirri is a well-known name in the agricultural space with over 20 years’ experience directly operating farming properties and running discrete mandates exceeding $1bn for industry and other sovereign wealth funds.
In 2018, the group has decided to open their capabilities up to the wider market.
The company plans to launch the Warrakirri Diversified Agricultural Fund in 2019 and raise up to $100m in capital as part of the first raising. The capital will be used to buy, develop and own a diversified portfolio of high quality agricultural properties leased to the best operators in the industry. The targeted properties will be valued at between $10m and $30m and the fund will target a return of between 7 to 11% per annum over the 7 year investment period of the fund.
The management team intend to diversify the portfolio across all of Australia and include all aspects of the production cycle including water entitlements, livestock, vineyards, fruit and nut trees as well as processing and infrastructure assets like greenhouses. Importantly, the fund will have gearing capped at 25% and will be managed on a capital calls basis, with 25% of committed capital due on application and the remaining expected to be called within 12 months.
We will cover the investment in greater detail in a later issue, however, as many readers know some of the best performing investments in recent years have been agricultural property trusts like Arrow and Rural Funds Group. It is yet to be seen whether Warrakirri can deliver a similar return profile, however, given the heightened volatility in markets we see an increasing need for less volatile, non-market linked assets.
The fund requires a minimum investment of $100,000 and is restricted to wholesale investors only.