Agrifirma looks abroad after $80m Brazil tie-up

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The deal will allow Jersey-registered Agrifirma to maintain plans for expanding in Brazil, despite controversial restrictions Brazil plans to impose on foreign land buyers. [Photo: Governor Jacques Wagner receives directors of Agrifirma in 2010 (Flickr)]
Agrimoney.com | 5 September 2011

Agrifirma looks abroad after $80m Brazil tie-up

Agrifirma Brazil, the well-connected farmland investment company, is investigating opportunities outside South America after placing most of its Brazilian agriculture operations into a joint venture with private equity heavyweight.

Agrifirma - whose backers include Lord Rothschild, which is advised by commodities investor Jim Rogers and has former Brazilian farm minister Roberto Rodrigues as a director – is to place half its assets, including all but 5,900 hectares of its 42,000 hectares of Brazilian farmland, into the tie-up.

Private equity group BRZ Investimentos, the partner in the venture, is injecting R$130m ($82m), and will gain a majority stake.

The deal will allow Jersey-registered Agrifirma to maintain plans for expanding in Brazil, despite controversial restrictions Brazil plans to impose on foreign land buyers, proposals industry leaders have warned threaten as much as R$60bn in potential investment.

Agrifirma stressed it had been in talks with BRZ for two years, before then-president Luiz Inácio Lula da Silva unveiled the reforms last year.

However, it will also see the group, which has highlighted its focus on transforming unproductive land into farmland, expand its horizons outside Brazil, and potentially into broader agricultural investment too.

'A lot of leads'

"It would not make any sense to compete directly with the joint venture," Jonathan Davis, the Agrifirma investment director, told Agrimoney.com.

"We are going to see if we can find some attractive opportunities elsewhere in the world."

These may involve the group, which is to be renamed Genagro, making fresh investments in farmland directly, or "it might be in some ancillary business", he said.

"We have a lot of leads."

While Mr Davis declined to reveal where the group may be heading, Agrimoney.com has learned that the scope of the search extends beyond South America.

Listing plans

Genagro will - in addition to its shareholding in the joint venture, named Agrifirma Brazil Agropecuaria - retain one farm in Brazil and $52m in cash, inventories and other financial assets.

The group, which as Agrifirma Brazil has raised $200m since being formed three years ago, said it maintained plans for an IPO, although it has pulled from a listing in Hong Kong which had received backing from a number of well-known Asian businessmen.

Many firms have reconsidered listing plans because of the ongoing stockmarket volatility.

Agrifirma Brazil Agropecuaria has plans for a listing too, in Brazil, "in the next few years", Agrifirma said.

The joint venture is expected to make additional land acquisitions beyond taking up options to buy a further 27,000 hectares at the Bananal property some 400 miles north of Brasilia.

Brazil's Congress heard last month that the country's move to restrict land purchases by foreigners, which have in effect been suspended for a year, threatens as much as R$60bn in investment over the next five years, mainly in sugar cane and forestry projects.
Original source: Agrimoney
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