Fri, May 26, 2017
A A A
Welcome Guest
Free Trial RSS
Get FREE trial access to our award winning publications
Industry Updates

Climate change and land depletion driving returns from farms

Monday, December 09, 2013
Opalesque Industry Update - Climate change and depletion of agricultural land are the most important factors driving investment returns from farmland, according to new research by Aquila Capital (“Aquila”), one of Europe’s leading independent alternative asset managers.

In the survey, both climate change and depletion of agricultural land leading to scarcity of supply were ranked equal first in terms of driving positive returns from farmland. In third and fourth place respondents ranked demand for food from increasingly wealthy people and from the global population respectively.

Detlef Schoen, Group Head of Farm Investments at Aquila Capital, commented: “There are powerful macro trends supporting farmland as an investment: every day, 30,000 hectares of farmland are lost as a net 200,000 is added to the world’s population.”

When asked to identify future farmland investment opportunities 70% of investors cited backing companies that provide farm supplies while half (50%) believed that owning and developing farms will provide strong returns. The same percentage (50%) felt that opportunities lie in investing in infrastructure firms building transport links to farms.

Investing in farmland is still a nascent asset class, representing an average of only 1.3% of investor portfolios: however 23% say they are looking to raise their exposure to farmland over the next one to two years and only 2.3% plan to reduce it. When asked how more capital can be attracted to the asset class, 70% of investors believed the investment industry needs to develop more effective ways to invest in farmland. Half (50%) also say institutions’ own lack of understanding of the farming sector is stopping them from investing more in farmland.

However, several large institutions now invest in farms, including sovereign wealth funds such as Temasek and the China Investment Corporation.

Detlef Schoen added “Going forwards, we believe the best opportunities lie in using a conservative, yield-driven strategy, pinpointing the best farmers and working with them to align their interests with those of investors to maximize success.”

Aquila Capital’s specialist investment fund, which focuses on milk farms in Australia, is currently projecting pre-tax cash returns of 4-6% per annum as part of a double digit overall internal rate of return.

Press release

bc

What do you think?

   Use "anonymous" as my name    |   Alert me via email on new comments   |   
Today's Exclusives Today's Other Voices More Exclusives
Previous Opalesque Exclusives                                  
More Other Voices
Previous Other Voices                                               
Access Alternative Market Briefing

 



  • Top Forwarded
  • Top Tracked
  • Top Searched
  1. Investing - Tudor Jones backs AI hedge funds, Massive hedge fund trades highlight insider buying: GE, Pentair, Tempur Sealy, Apollo Global and more, Hedge funds big wigs are buying consumer and selling tech, here's the stocks[more]

    Tudor Jones backs AI hedge funds From FT.com: Hedge fund magnate Paul Tudor Jones has invested in a brace of artificial-intelligence powered "quantitative" hedge funds, underscoring the increasing acceptance that the industry will need to turn more to technology and away from traditional

  2. Soon hedge fund investors won't bet on a man, they will bet on a machine[more]

    From Forexlive.com: The Wall Street Journal is in the midst of a 17-part series that looks at the rise of quant funds. The AUM and money invested in quant funds still trails traditional asset managers but the gap is closing. What's truly amazing is volume. Quant funds make up 27% of trading vo

  3. Investing - China's HNA wants to invest in Value Partners, Risk parity investors reap rewards from rebalancing act, SoftBank's $100 billion tech fund rankles VCs as valuations soar[more]

    China's HNA wants to invest in Value Partners From Reuters.com: HNA Group has alighted on a logical, if pricey, target in Hong Kong. The deal-hungry Chinese travel conglomerate known for overpaying wants to invest in Value Partners, one of Asia's few sizeable independent asset managers,

  4. Opalesque Exclusive: Investors warm to ESG, but seek standardization[more]

    Bailey McCann, Opalesque New York: Asset managers and asset owners plan to double their investment in Environmental, Social and Governance (ESG) driven strategies over the next two years, according to a survey from BNP Paribas Securities Services. The report, "Great Expectations: ESG - what's nex

  5. J.P. Morgan Asset Management launches ultra-short income ETF[more]

    Komfie Manalo, Opalesque Asia: J.P. Morgan Asset Management, the $1.5tln investment management arm of JPMorgan Chase & Co., has launched the JPMorgan Ultra-Short Income ETF (JPST), an actively managed ETF that seeks to provide current incom