The strategy managed by the company’s New Agriculture division aims to consolidate natural vegetation, agriculture, and forestry together as operational assets.

New Forests, a Sydney-based investment manager focused on nature-based assets around the world, said its New Agriculture division has launched a landscapes strategy for institutional investors.

The target raise is A$750m (€420m) and the fund will be structured as a 12-year closed-vehicle. The targeted internal rate of return is 9%-11%.

The strategy focuses on agricultural assets in Australia and New Zealand, and will also seek to tap environmental markets, including those for carbon and biodiversity, renewable energy and conservation covenants. Investments will target areas such as rainfed and irrigated row cropping, horticulture and livestock, as well as related agriculture infrastructure.

The company is aiming to win commitments for the strategy from pension funds and insurance companies across Europe and Asia Pacific, as it seeks to broaden New Agriculture’s investor base. New Agriculture’s investments so far have been supported by the Alberta Investment Management Corporation (AIMCo), the manager of public funds and pensions in Canada.

Sustainable land use model
New Agriculture plans to use an integrated sustainable land use model, which brings natural vegetation, agriculture, and forestry together as operational assets. The focus will be on optimising landscapes by enhancing yields, diversifying revenue streams, and increasing asset values, according to the company.

Bruce King, New Agriculture’s director of agriculture said there was a need to produce food and fibre more sustainably and protect natural resources as the global population continued to grow.

“Our institutional investor clients are seeking to invest in agriculture assets for their consistent returns, as well as the potential to contribute to long-term, impactful environmental outcomes,” he said.

According to King, Australia’s agricultural sector had the potential to be a leader in the transition from traditional farming methods to innovative practices and technologies that improve environmental outcomes and lead to wider adoption of regenerative practices.

New Agriculture said it now manages over A$1.5bn (€844m) in total assets across 3.1m hectares.

It was launched by New Forests in 2022 to manage Lawson Grains, a grain grower on a 100,000-hectare agricultural land estate across New South Wales and Western Australia. That was acquired from Macquarie with investment from AIMCo.

In 2023, New Agriculture acquired 3m hectares in Western Australia from the East Kimberley portfolio held by the family office of Australian-based Chinese property developer Hui Wing, a purchase also supported by AIMCo.

Evolution in approach
David Shelton, New Forest’s managing director for Australia and New Zealand, said the strategy marked an evolution of the company’s approach to forestry and agriculture developed over two decades.

“Our approach has always focused on optimising land use, incorporating multiple revenue streams and environmental outcomes. This strategy represents a logical expansion of that approach and our expertise in this area,” he said.

The wider New Forests company had A$11.7bn in assets under management across more than 4.2m hectares of investments at the end of June 2024.

In January, it announced the final close of the Australia New Zealand Landscapes and Forestry Fund(ANZLAFF) with total commitments of around A$600m from European and Asia-Pacific institutional investors.

Last year, Shelton told Impact Investor that investment in the forestry and land use sectors was a crucial in creating a pathway towards net zero. He said ANZLAFF had a broader remit than some of the company’s previous forestry funds, offering greater exposure to other forms of sustainable land use in addition to the core forestry theme, including agriculture, processing, carbon-related projects, biodiversity, and renewable energy.

The company has also recently launched a fund with Japanese paper-products manufacturer Oji to help meet the company’s environmental goals. Oji will invest around $300m (€265m) into the Future Forests Innovations Fund, which is being invested in forestry plantations in Southeast Asia, North America, Latin America and Africa.

Source: impact-investor.com