Futuregrowth Agri-Funds, portfolios specialising in the investment of agricultural land, biological assets, agricultural infrastructure and other related farming implements, form part of Futuregrowth’s suite of developmental investments.
For more information on this fund, please email fundinfo@futuregrowth.co.za
The benchmark is CPI + 10%.
OBJECTIVES
The funds aim to outperform the CPI by 10% per annum before the deduction of taxes and fees and with income reinvested over a rolling 3-year period.
COMPOSITION
The funds' investments are in the actual farmland and infrastructure, which is leased to an approved operator to manage and run the farm. The farmland will be developed and managed in partnership with these large-scale agricultural operators to further enhance its value. All farms acquired have further development potential. According to a planned expansion programme, the Funds invest capital into farms to develop additional arable land. This may include the acquisition of adjacent farmland.
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The funds invest mainly in equity and equity related instruments, but allows up to 10% in debt instruments.
The investments can be leveraged up to a maximum of 30%. Returns are generated from the lease fee (typically from 8% of the farms’ value), with the capital value increase realised upon final exit with the profit on the sale of the farmland.
The choice of assets is guided by increasing real value, realised by improving yield, efficiency and management.
Aside from the stable returns generated, the social impact is significant. The investment caters for a minimum of 0.5% of invested capital to be spent per annum on healthcare and educational programmes for workers.
The funds have fairly high risk and concentration limits and good yield enhancement, and are not intended to be highly liquid given that the underlying transactions are unlisted and unrated.
SOCIAL IMPACT
The funds aim to provide investors with a developmental vehicle that facilitates agricultural development, farming infrastructure, social, environmental and economic development in southern Africa, and incorporates a proven investment model to address sustainable rural development and agricultural initiatives that lead to:
- Land development and conservation
- Environmental reform
- Employment
- Health care
- Housing
- Education
- Food security
- Skills transfer