AUSTRALIAN agricultural asset manager Warakirri has established its fourth investment vehicle, the Warakirri Diversified Agriculture Fund (DAF) to give companies and high net-worth individuals and families an entrée into primary production.
DAF is a unit trust and completed its initial seed capital-raising in June.
It sits alongside Warakirri’s three other agricultural investment arms: Daybreak Cropping; Warakirri Cropping, and Aurora Dairies.
DAF is targeting high-value agricultural sectors including horticulture, and while yet to buy its first property, Warakirri head of distribution Stuart Devlin said due diligence was being undertaken on potential assets.
Following independent research commissioned by Warakirri in the high-value sectors, fruit including citrus and berries, nuts, wine and table grapes, water, intensive livestock enterprises, and agriculture infrastructure are all potential sectors to be included in the DAF portfolio.
“The primary focus of the fund is to buy A-grade agricultural assets which are fully operational, and lease them to A-grade operators.”
Mr Devlin said this could include buying assets to lease back to vendors if they wished to stay living and working on the operations they have developed and managed.
“Once the fund is fully diversified across sectors, there may be some development opportunities, but not in the initial phases.”
Mr Devlin said the mandate for DAF came from “reverse inquiry” which started to filter into Warakarri about three years ago from non-institutional capital-holders looking for a means of investing in agriculture.
DAF will be an evergreen fund, and Mr Devlin said it will be diversified by tenant, enterprise and end market, as well as location.
“DAF will allow us to start small and diversify quickly in a lower-volatility environment.”
Mr Devlin said existing and impending free-trade agreements Australia holds with markets for Australian horticulture were likely to increase opportunities for horticultural exports.
“We have created a structure that is a good way for individuals to access agriculture, and growth in export markets in a similar way to institutional investors.”
DAF has a minimum investment size of $100,000, and following its initial capital-raising, it aims to raise and invest more than $300 million.
Mr Devlin said DAF was looking for a net income return of 4-7 per cent per annum, and a total return of 10-12pc per annum.
Liquidity windows will be available on the seven-year anniversary of the fund, and every five years thereafter.
“As we grow in scale, we might be able to offer a faster turnaround than we can initially.”
Mr Devlin said Warakirri has significant experience in managing agriculture portfolios, and has broadened its scope with DAF.
“DAF is accessible for high net-worth individuals and family offices; other sectors, such as Cropping are better suited to larger-scale investors.”
Warakirri Cropping owns and operates broadacre farms which in total cover approximately 80,000 hectares in New South Wales, Victoria, Western Australia and southern Queensland.
Daybreak Cropping currently owns four large-scale cropping aggregations covering more than 45,000ha in NSW, Victoria, Western Australia and southern Queensland.
Aurora Dairies owns and operates 11 dairy farms in Victoria and south-east South Australia which in total cover around 4600ha and milk more than 8000 cows.