View
94
Download
0
Tags:
Embed Size (px)
Citation preview
STRICTLY PRIVATE & CONFIDENTIAL
Securing private investment in land regeneration
Paul McMahon
Managing Partner, SLM Partners LLP
10 June 2015
SLM Partners is an asset manager that focuses on sustainable land use
2
Strategy is to scale up regenerative, ecological agricultural and forestry systems that deliver financial returns and environmental benefits
Investment professionals in London and New York, working with farmers and foesters on the ground
First fund, the SLM Australia Livestock Fund, has raised AU$105 million (US$80 million) in equity and debt
Launching new projects in Chile (sheep production) and Ireland (forestry), and exploring opportunities in USA and Spain
Target investors are pension funds, insurance companies and family offices
Date Creek, Arizona Downstream, same day, different management
Next door, same day, different managementSonoran Desert, Mexico
Near Victoria Falls, Zimbabwe Next door, same day, different management
In Australia, we use ‘holistic planned grazing’ or ‘mob grazing’ to restore grasslands
3
Put animals in large herds
Divide land into many smaller paddocks
Improve stockwater facilities
Move animals according to adaptive plan
Use impact + rest to restore grassland
The SLM Australia Livestock Fund is up and running
4
10-year, closed-end private equity fund
First closing in June 2012 with Danish pension fund as anchor investor
Rabobank is providing up to AU$30 million in debt
Strategy is to acquire and operate land for beef cattle production, implementing holistic planned grazing
480,000 hectares (1.1 million acres) of land acquired so far
8,000 cattle in the herd, with plans to reach 30,000 to 40,000 in 5 years
Target net Internal Rate of Return is 12% after all fees and taxes
7 managements units in Queensland and New South Wales
5
Name:Cunnamulla
Charleville
District:Size (ha):Price:
PaduaCunnamulla43,174$10.0m
Name:District:Size (ha:Price:
Listowel DownsBlackall25,523$11.2m
Name:District:Size (ha):Price:
ColacQuilpie165,182$6.4m
Name:District:Size (ha):Price:
GarrawinEulo79,312$4.3m
Name:District:Size (ha):Price:
AmendaCunnamulla43,773$11.8m
Name:District:Size (ha):Price:
WillacoraCunnamulla49,120$9.3m
Name:District:Size (ha):Price:
EurekaEnngonia71,131$7.4m
Australia allows scale – big herds in big country
6
Positive impacts were visible after the first year
7
Neighbouring property “Noorama” under conventional management, 23 Mar 2014
SLM property “Padua Park” under holistic grazing, 23 Mar 2014
More animal grazing days were taken from the Padua Park side
than Noorama
8
We are launching a new project in Chilean Patagonia
70% of grasslands of Patagonia suffer from degradation
Holistic planned grazing can restore grasslands, while improving productivity
Our operational partner has worked with 30+ sheep farmers in Chile and Falkland Islands
Strategy is to acquire grazing properties in southern Chile and introduce better grazing management
Revenues will come from sheepmeat (60%) and wool (40%)
Initial size of opportunity is US$100m
9
There is an opportunity to harness investor interest in land
Global assets under management reached $64 trillion in 2013
‘Alternatives’ accounted for $7.2 trillion
Within Alternatives, $2.4 trillion was invested in ‘Real Assets’
Forestry is a well-established asset class for institutional investors
Agriculture is now emerging as an ‘asset class’ for investors – an estimated $45bn is invested in farmland
How can we channel some of this long-term capital towards land regeneration?
Source: McKinsey, HighQuest
WSIB approves $300m commitment to Teays River
MainePERS in $200m agri investment
SWF investment in agri grows to $11bn
Black River attracts nearly $1.3bn to food & agri funds
AP2 invests $750m in TIAA-CREF II
What we have learnt about attracting private investment
10
1. It is only a concept on paper without great local managers – real farmers and foresters
2. Geography is a big determinant of risk-reward requirements
3. Investors want to know what they are investing in – too many layers and too much complexity can scare them off
4. It is hard to match investors’ desire for scale with the ‘natural’ size of many land regeneration activities
5. Commodity returns should be front and centre – future environmental payments are icing on top