Experienced asset managers SLM Partners and Impact Ag Partners are launching a new agricultural real assets fund — the SLM Agri Carbon Fund — to invest in regenerative agriculture and carbon in Australia. Currently fundraising, the Fund is targeting A$250 million (US$160M).

The SLM Agri Carbon Fund will implement regenerative agriculture practices to produce grains, beef, lamb, wool and timber. It will also establish carbon projects on all properties and generate large volumes of Australian Carbon Credit Units (ACCUs). The Fund has an Agricultural Real Assets strategy that also provides exposure to natural capital and outcome-focussed environmental impact. 

Regenerative Agriculture seems to be gaining increasing attention, yet this is not a new area for the parties to this joint venture, who have been profitably and sustainably managing agricultural asset for over ten years. Impact Ag Partners has operated farms and pioneered carbon projects in Australia since 2010, and SLM Partners has over a decade’s experience managing funds and separate accounts globally.

The team has a deep track record in natural capital investing (rather than having recently pivoted to regenerative Ag), having deployed and managed A$1.8 billion in agriculture and forestry in Australia and other regions, and operated 331,000 hectares of farmland in Australia. 

To date, this involved operating separately managed accounts. But given the demand and interest from their networks to participate in smaller ticket sizes, the new multi-investor fund was created, allowing new entrants to the space to participate. 

Bringing together their unique set of complementary skills and a shared investment philosophy, the parties began implementing the joint venture strategy last year. It established a separately managed account that acquired two properties in Australia on behalf of a European family office for a total investment of more than A$100 million. This portfolio has already registered a soil carbon project and is well-progressed on planning for two separate environmental planting projects — all within productive operating agricultural enterprises.

The launch of the new collaborative SLM Agri Carbon Fund allows for the scale up of the strategy. An anchor investor for the Fund from an Australian family office has been secured, committing A$10 million. 

The opportunity in Australian Farmland

A world leader in agricultural commodity exports, Australia is a primary destination for agricultural investment. It boasts macroeconomic stability, economies of scale, access to Asian markets and strong operators. Australia also has a well-developed and regulated carbon market, allowing investors to underwrite carbon returns for certain agricultural strategies. 

The Fund will seek to acquire properties in higher rainfall areas of New South Wales and Victoria to produce annual crops and livestock, while implementing regenerative farming practices to improve soil health, enhance biodiversity and increase carbon removals.

Carbon projects will be established on all acquired properties, with the goal of generating more than 1 million ACCUs over the first 15 years. The Fund targets a net IRR of 9-10% (with low leverage), and envisions further upside achievable through biodiversity and renewable rentals on target properties.

Bindi Turner, CIO Agri Carbon Investments, explained that the Fund is overwhelmingly about investing in real assets, providing long term returns underpinned by something tangible. It’s investing in agriculture and the food supply chain, providing diversity and an inflation hedge. She notes that thesis, of agriculture and agricultural land as a inflation hedge, was really proved true during the COVID years, with particularly strong returns over the past five years despite the challenges of the wider economy with inflation.

Targeting A$250 million (US$160M), the Fund is now in conversation with family offices and institutions in Australia and globally and aims to hold a first close in mid-2024. 

This is a high impact strategy that should appeal to investors who want exposure to natural capital and real assets with an experienced management team committed to regenerative agriculture.

SLM Partners

SLM Partners is an award-winning global real assets manager dedicated to regenerative agriculture and forestry. Founded in 2009, SLM has operations and teams in Europe, the USA and Australia. It manages a total of A$890 million (US$580m) in funds and separate accounts for institutional investors and family offices.

Impact Ag Partners

Impact Ag Partners is a specialist agriculture operator using regenerative farming principles and developing and monetising natural capital opportunities. Founded in 2010, Impact Ag Partners manages over A$955 million (US$620m) of assets across Australia and North America invested in farm and ranch land. These farms and ranches produce annual and permanent crops and raise livestock, as well as delivering ecosystem service payments.

Find out more

Later in May, the SLM Agri Carbon Fund is holding a lunch in Sydney with NorthStar Impact Funds to discuss carbon markets in Australia and present on the Fund. There will also be a roadshow of 1:1 meetings. If you’re interested in either, email lucy.hames@northstarimpact.com.au.

For more on the Fund, you can also reach Bindi Turner at belinda@agricarboninvestments.com


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