Dutch insurers Dela and De Goudse have helped Kempen raise an additional €150m for its global sustainable farmland fund.
The Kempen SDG Farmland Fund, launched in April with €200m seed capital from PostNL pension fund, secured the additional capital during its latest investment round, Kempen said.
The fund, which aims to invest in agricultural land and in companies that own farmland, has so far allocated €110m to agricultural projects including olive orchards in Portugal, avocados and almonds in Australia and New Zealand, as well as annual crops such as grains, beans and vegetables in Denmark.
Besides offering an attractive return, the fund also aims to contribute towards sustainable food production, the manager said.
Frank Eizinga, Dela’s CIO, said: “With this investment, we are further diversifying our portfolio while at the same time contributing towards the achievement of our sustainability goals.
“What attracts us the most in the Kempen SDG Farmland Fund is that a sustainability plan is drawn up for each investment, making the sustainable goals concrete as well as creating accountability for the achievement of the goals.”
According to Edzard Potgieser, the fund’s portfolio manager, the extreme price increases of some crops in recent months impact the fund in two different ways,
“Thanks to the higher market prices, the profitability of farmers increases. This results in higher revenues in own-and-operate investments and, to a somewhat lesser extent, in higher future rental income.
“Secondly, the price of land increases as well. This is positive for existing investments but makes new investments relatively costly.”
Potgieser said the impact of higher commodity prices is only felt in part of the portfolio. “We’ve only seen extreme price increases for some crops, such as soybeans and wheat.”
The prices of for example avocados, almonds, vegetables and apples have remained more stable, Potgieser said.
To read the digital edition of the latest IPE Real Assets magazine click here.