GLOBAL - Denmark's PKA has invested DKK250m (€33.5m) in African agriculture as the first step in a broadening of its investment focus in response to rising global demand for farming products.
The sum has been invested via the Silverland private equity fund, the pension fund administration group said.
Henrik Staugaard Johansen, portfolio manager at PKA, said: "The rise in demand for agricultural products has made it attractive to invest in agriculture - not least in Africa, where prices for farming land are relatively low, compared with the US, for example, and where there is also great potential to optimise businesses for the benefit of our members, but also for the good of the local area."
The Silverland fund is focusing on agricultural investments in sub-Saharan Africa. It is expected to be DKK1.5bn in size, with co-investors IFU (the Industrialisation Fund for Developing Countries) and several investors from other countries, PKA said.
PKA said it has earmarked DKK1.3bn for investments in agriculture, of which the Silverland investment is the first step.
It also said the investment cemented its focus on the African continent, adding to existing investments in microloans in Kenya and forestry in Uganda and Mozambique, as well as involvement in a private equity fund and an emerging markets fund with a focus on Africa.
PKA managing director Peter Damgaard Jensen, said: "As an investor, certain parts of the African continent are particularly interesting because of the very high growth rates experienced.
"Africa is developing rapidly and on its way to becoming the next centre of global growth. So we see a clear opportunity to combine the goal of gaining a good return for our members and making a positive difference by creating development in the areas we are investing in."
The fund will support surrounding small landowners in selling their crops for better prices, as well as by teaching them how they can improve their profits by, for example, sowing and harvesting at the right times, Damgaard Jensen said.