New $150m Aussie farm fund to tap into global food demand

“Our aim is to build a portfolio of 30 to 40 assets in Western and Eastern Australia, raising about $150 million in equity up to a maximum of $200 million, targeting an 8-9 per cent internal rate of return [IRR].”

The new fund, called the Stafford Australian Agricultural Real Estate Fund (SAAF II), will look to raise capital from Australian family offices, institutions and private funds as well from European investors.

Institutional investors are heavily under-represented in agribusiness worldwide (and in Australia), accounting for less than 1 per cent of global investment, Mr Allen said.

Stafford, led by London-based Angus Whiteley, has $US5.3 billion ($7.6 billion) of funds under management and has a number of funds with exposure to farming assets, including timber plantations.

Mr Allen said Stafford would look to start deploying the capital raised in 2020 to buy a broad range of assets in different rainfall zones and soil types, with good proximity to export markets.

“We will focus on row crops like wheat and barley and grazing land, sometimes where both can be on the same property,” he said.

“We will also look at sugar, cotton and rice. But we won’t buy land for permanent crops like almonds and vineyards, which have a higher risk-return profile.

“We like Australia as a destination. It has the second lowest subsidies in the developed world, which favours the better operators. Australia also has a proximity advantage to Asia over rival countries. And Australian products achieve a premium, as they are considered to be higher grade and better quality.”

Stafford’s first Australian fund raised $33 million and was a co-investment between Australian super fund and a European pension fund.

According to investment website Agri Investor, Stafford partnered with Growth Farms, an Australian fund manager founded by federal energy minister Angus Taylor, which purchased Kerry Stokes’ Cygnet Park Farms aggregation on Kangaroo Island in February for about $25 million.

Last year, Stafford seized control of the London-listed Phaunos Timber Fund in a hostile takeover.

.In July last year, Stafford reported that it had secured $US1.3 billion in new commitments to various investment vehicles across different asset classes including infrastructure.

Its Stafford Infrastructure Secondaries Fund II has made six secondary investments in leading infrastructure managers in Europe, the US and Australia.