PEI | 28 August 2014
AP1 eyes increased exposure to NZ dairy fund ahead of close
By Rebecca Akrofie
AP Fonden 1 (AP1), the Kr252.5bn ($36 billion; €28 billion) Swedish pension fund, is considering increasing its exposure to Southern Pastures, a New Zealand own-and-operate dairy farm fund.
The pension fund invested in Southern Pastures as a general partner alongside the fund’s founders Prem Maan, Graham Mourie, Taari Nicholas and Phillip Wight when it launched in 2012, sinking $70 million into the eight-year fund.
“We got to know them from an investor standpoint and we developed that relationship,” Rikard Kjörling, head of external management at AP1, told Agri Investor. “We’re currently in discussions about some investments with them and we will probably follow u before they close the fund in December.”
AP1 classifies agriculture in its new assets category, and has no target allocation for agriculture at present.
Southern Pastures is set to close for the final time in December this year after two years of marketing. It is targeting an overall size of NZ$400 million ($336 billion; €254 billion) and has raised NZ$250 million from seven investors so far.
Most recently New Mexico Education Retirement Board, the US pension fund committed $30 million.
The fund has already deployed NZ$215 million on dairy farms and support land and sourced most of the deals itself, without external help, according to Prem Maan, managing director and chief executive of the fund. It is does not employ debt and has an emphasis on sourcing sustainable farms.
“Southern Pastures only buys pastoral farms in regions where it can deploy its free-range and animal-welfare based farming systems and where it is comfortable about water security and the potential impacts of climate change,” Maan told Agri Investor.
Southern Pastures is designed specifically for pension fund and endowment investors. Its investment strategy is to own, operate and enhance sustainable milk production from free-range dairy cows while adhering to extensive environmental, social and governance standards.
Southern Pastures is also a signatory of the Principles for Responsible Investment and the Farmland Principles.