January 20, 2010
Lumix Capital AG is gearing up to launch an agricultural hedge fund later this quarter. The Lumix AgroDirect Fund, which has been incubated since June 2008, invests in the production of soft commodities and in commodity trade finance in Uruguay, Argentina, Brazil and Paraguay. The managers of the fund aim to capture the spread between the price of commodities and the cost of farming inputs by investing in the production of soybeans, wheat, and corn in leased farmland where production is outsourced to local farmers. The fund is hedging its weather risks through regional and crop diversification and through specialty insurance products. It is also opportunistically investing in agriculture-related securities and other special opportunities. “Farming is very volatile when you talk about one plot of land,” Gonzalo Fernandez Castro, Lumix’s managing partner, told FINalternatives. “If you have 1,000 plots of land in different areas, the volatility is very much reduced.” The firm has already raised US$20 million of capital from its partners and seed investors, and it is targeting a $100 million close for its maiden offering. Castro, a former investment manager at Jacobs Holdings AG, a family office in Switzerland, is looking to tap the region’s family office space for capital as well as other funds investing in the space. The AgroDirect Fund charges a 2% management fee and a 20% incentive fee. The firm also has a farmland conversion fund and other credit strategies in the works for launch at a later date.
