Mon, Sep 28, 2020
A A A
Welcome Guest
Free Trial RSS
Get FREE trial access to our award winning publications
Alternative Market Briefing

Impact food value chain strategy pays off for this Swiss manager

Friday, August 14, 2020

amb
Nabil Marc Abdul-Massih
B. G., Opalesque Geneva:

A Swiss manager that provides short-term private loans to corporates - especially in the food value chain sector - has maintained steady returns this year and expects to continue doing so.

The Ancile Fund provides short-term alternative credit to non-speculative corporates active responsibly in commodity value chains. The fund is non-directional and unleveraged and focuses on emerging markets.

Launched in November 2009, the Cayman B USD share class, which manages $285m, has returned +162% since inception and +3% YTD after returning +0.4% in June 2020, outperforming several indices YTD including the Rogers Commodity Index and the 3M Libor Index.

The fund is managed by INOKS Capital SA, a FINMA regulated Swiss-based manager that runs $603m in Cayman and Luxembourg investment funds as well as SMAs, and finances more than 150 corporates.

INOKS was one of the signatories to adopt the Operating Principles for Impact Management last year.

CEO Nabil Marc Abdul-Massih and COO Nicolas Malky have each more than 20 years of experience in commodity investments. Mr. Abdul-Massih will be speaking at the Fixed Income Alternatives Strategies webinar on Wednesday 9th September at 10 am EST.

Food value chain

The managers describe the strategy as a "food value chain fund" that provides tactical (short term and mid-term) collateralized (i.e. hard assets-based) farming, inventory, processing, and export/import financing.

The food value chain is the network of stakeholders involved in growing, processing, and selling the food that consumers eat-from farm to table This includes (1) the producers that research, grow, and trade food commodities, such as corn and cattle; (2) the processors, both primary and value-added, that process, manufacture, and market food products, such as flour and bread; (3) the distributors, including wholesalers and retailers, that market and sell food; (4) the consumers that shop, purchase, and consume food; as well as (5) governments, non-governmental organizations (NGOs), and regulators that monitor and regulate the entire food value chain from producer to consumer (Deloitte).

The Ancile Fund's current portfolio transactions are about 90% food-related. "This is a historical focus for INOKS Capital's investment management (with varying degrees), and such by design," says their latest newsletter seen by Opalesque. "Basic foods and related products tend to have a more inelastic demand curve. People need to eat for subsistence and that incompressible level of demand configuration for non-perishable food basics (like wheat or rice or vegoils or sugar or other soft commodities) has been researched to insulate, as much as possible, the portfolio from general macro-economic hypothetical tail type turmoil."

The investment risks, the managers say, can be found in loss of capital and liquidity. They are mitigated by the lack of leverage, insurance overlays, and over-collateralisation.

The benefits can be found in possible income distribution, low correlation to traditional asset classes, the sustainable investments, the funding gap that the fund addresses, "which is even increasing today with pricing rising". Furthermore, such investments create a positive impact as an investor in their four impact themes (food security, poverty reduction, woman empowerment, and environmental quality).

With regards to restrictions related to the pandemic, INOKS says in an earlier newsletter that no country has been halting essential goods movements. Furthermore, some European countries have been allowing seasonal workers from abroad to travel to ensure the spring planting and harvesting of freshly produced goods.

"We expect this to stay the same (as) food supply ensures the population survival. Even in the commodities producing emerging markets, the exports are the lifeblood of these countries to obtain much-needed income. Countries like the Ivory Coast are the world's largest producer of cocoa or coffee.

"The lockdown at home changed entirely our habits but nevertheless, we still need to consume food, noticeably consumption of coffee, cocoa, sugar, fruit juice, bread, pasta and other non-fresh basics."

Two recent investment examples include one in concentrated fruit juice firms in Eastern EU, where the transaction involves the purchase of apples, storage in vetted warehouse locations, processing and storage of the concentrate at vetted locations and export to OECD domiciled buyers; and one in peanuts production in South Africa, where the transaction involves the supply of farming input (such as fertilizers, seeds, fuel), payment of labour force and farming activities, later on, storage, processing, transportation and export of the harvested financed crops.


Upcoming webinar:

Fixed Income Alternatives Strategies: 5 strategies on one panel
Wednesday, Sept. 9th at 10 am EST
Details and (free) registration: www.opalesque.com/webinar/

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: Tech stocks aren't in a bubble, but investors should be pickier, Credit Suisse says, Pandora tops world's best-performing market as hedge funds exit, What Bill Ackman is investing in now[more]

    Tech stocks aren't in a bubble, but investors should be pickier, Credit Suisse says From Business Insider: Credit Suisse on Thursday trimmed its overweight rating for tech stocks, recommending investors be more selective with their sector picks. Crowding in tech giants and the stocks&#

  2. Investing: Third Point buys stakes in Facebook, Alibaba in Q2, exits Sony, Allergan, Here's what investors with $3.4tn are buying during covid, An energy trader seeks profit from batteries in European markets, Hedge fund ARCM to sell $200m of Premier Oil debt[more]

    Third Point buys stakes in Facebook, Alibaba in Q2, exits Sony, Allergan Third Point LLC acquired new stakes in Facebook Inc. and Chinese e-commerce companies Alibaba Group Holding Ltd. and JD.com Inc. during the second quarter of 2020 as it divested positions in Sony Corp. and drugmaker

  3. PE/VC: Investors have bet big that you can get private equity returns in the public markets. A new study says otherwise, Aberdeen's Bonaccord teams up with CAZ to buy stakes in private markets managers, The role of private equity in economic recovery from Covid-19[more]

    Investors have bet big that you can get private equity returns in the public markets. A new study says otherwise From Institutional Investor: New research suggests private-equity-owned firms respond differently to financial distress - and that the resulting performance "cannot be replicat

  4. Opalesque TV: Meet a Swiss fund manager who hedges with a difference[more]

    B. G., Opalesque Geneva: There is a quant manager in Zurich that does things a little differently, which has helped a lot so far this year. ICON Asset Management, which was mentioned in the

  5. Franklin Templeton creates new unit with QS Investors[more]

    Laxman Pai, Opalesque Asia: Franklin Templeton will combine recently acquired QS Investors, a Legg Mason subsidiary, with Franklin Templeton Multiasset Solutions (FTMAS) business into a single consolidated unit. Effective Oct. 1, the combined business, called Franklin Templeton Investment Sol