Duxton Asset Management and its investment in Tanzanian rice farming

INSEAD | 2013

Duxton Asset Management and its Investment in Tanzanian Rice Farming

Anindita Sharma

A specialist agribusiness investor is evaluating an equity investment in rice farming and processing in Tanzania, Africa. Duxton Asset Management has a business strategy  of investing in and operating agricultural assets, many of which are in developing or  even frontier markets. The case discusses the complexities of investing in an atypical  multi-dimensional asset and allows for an exploration of the fast-growing space of  impact investing.

This case touches upon several relevant aspects of alternative private equity (PE)  strategies:

• Agriculture has been an underinvested asset class for some time. It is currently not  well understood by mainstream investors yet is becoming increasingly important in  the context of a growing world population facing resource constraints. In addition, direct investments into farmlands require specialized knowledge and expertise.

• Farmland investments are intricately connected to environmental, social and  corporate governance (ESG) issues, which the case highlights through references  to SRI (socially responsible investment) and Duxton’s approach to ESG. One of  Duxton’s strengths lies in its responsible and proactive management of ESG risks.

• The destination here is Tanzania, a frontier market for private capital investments.  Local dynamics are promising and rewards can be high, yet many challenges exist. Few investors have the ability to spot and manage operating assets in this part of  the world. Foreign investors are intrigued but not completely convinced of Africa’s   potential to compensate for the risks involved. 

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  • 31 Dec 2013

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