APG wants to grow its investments in forestry and agricultural land from a current €1.8bn to between €3bn and €5bn in the next few years.
To be able to find sufficient investments to meet this goal, the €573bn pension asset manager has doubled the size of its investment team for the asset class, according to Vittor Cancian, APG’s natural resources portfolio manager.
“Our new people are based in Hong Kong and New York,” Cancian said in an interview posted APG’s website. “It’s important for us they are close to local markets as they need to have their own network and feel the local dynamic. That’s not only important to be able to select the right investments, but managing assets also works better if you’re close to the land you own.”
Last month, APG acquired a part of Chilean forestry firm Arauco for $385.5m (€324m), together with Timber Investment Group and Canadian pension fund British Columbia Investment Management Corporation.
APG’s current forestry and agriculture portfolio is mostly invested in fields where crops such as soy beans, wheat and corn are being cultivated. The pension asset manager also has exposure to vineyards and fruit and nut plantations. The remainder of the portfolio consists of forestry investments, mines and energy. APG is in the process of exiting the latter two categories.
The asset manager invests in forestry and agriculture exclusively for its main client ABP, which sees the asset class as a suitable way to contribute to sustainable development goals, while expecting an annual return of 7-9%.
APG is not the first Dutch pension investor to announce a new focus on agriculture and forestry investments. Last month, pension fund PostNL announced a €350m investment in agricultural land through the Kempen Farmland Fund.
Metal scheme PME, which has been investing in American forests for some time, is investigating whether it can expand this investment.
To read the digital edition of the latest IPE Real Assets magazine click here.