Dutch ag pension to divest stake in ag investment fund Fagoed

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Global AgInvesting | 4 September 2019

Dutch ag pension to divest stake in ag investment fund Fagoed
 
By Lynda Kiernan
 
BPL, the Dutch pension fund for the Netherland’s agricultural and green sectors, is planning to divest its stake in Fagoed, a €140 million (US$154 million) fund invested in agricultural land.
 
Dierenartsen, a Dutch pension fund for veterinarians, has also announced that it too plans to divest from Fagoed.
 
Both BPL and Dierenartsen have stated that the decision to divest was made due to Fagoed being too small of a fund, and Richard Devue, director of BPL, told IPE that a survey conducted on Fagoed concluded that the fund needed to improve its risk management. 
 
Established in 1987, Fagoed was launched with the goal of offering farmers an alternative source of financing to bank mortgages through a “leasehold” deal structure. Fagoed explained that a leasehold is a hybrid status between ownership and leasing. Ownership is divided into two parts: the right of leasehold, and “bare ownership”. The farmer sells the bare ownership to Fagoed but keeps the right to leasehold which is recorded in a notarial deed. Repayment of the financing is conducted as a buy-back of the bare ownership. 
 
BPL’s stake in Fagoed is worth €21 million (US$23 million), and together with Dierenartsen’s stake worth €16.5 million (US$18 million), accounts for approximately one quarter of Fagoed’s assets under management.
 
Given that Fagoed will be losing a quarter of its AUM, the IPE reports that the fund’s supervisory board (RvT) has stated that the fund will be unable to continue under its current iteration. And although BPL said that it remains fully committed to agricultural investment – “as investing in agricultural land delivers better returns than government bonds and residential mortgages,” according to Devue, the oversight that would be needed on Fagoed would represent too much time. 
 
Formerly known as Bedrijfspensioenfonds voor de Landbouw, BPL assumed its new name in January 2017 to better reflect its participants and its expanded focus on agriculture, and to attract greater pension assets. Under its new identity, BPL undertook a shift to attract pension funds tied in to adjacent industries to primary agriculture such as fruit and vegetable processing, or even, cigar making. 
 
“For a long time, our name has not fully covered what we stand for — horticulturists and agricultural contractors, for example, have been among our participants for decades,” Gerard Roest, BPL’s chairman, told IPE at the time. 
 
In 2015, BPL absorbed four pension funds bringing with them €880 million (US$970 million) in assets. Among those that merged were the pension funds of butter company Dairy Trading, global giant Heinz, flavor and fragrance leader Givaudan, and the pension fund for the Netherland’s vegetable and fruit processing industry, Groenten en Fruit. 
Original source: GAI
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