MAI currently advises the Buy & Lease farmland Funds, in Australia and New Zealand, and the British Innovation Fund. MAI has also identified a Global Diversified farmland strategy and a Tropical Forestry strategy as future fund launches.
MAI’s farmland strategies provide investors with exposure to the farmland asset class but with different risk and return characteristics. The main objective of the Buy and Lease strategy is to deliver real income (4% to 6%) pa with a similar level of annual capital appreciation, equating to an overall IRR of 10% to 12%. The Global Diversified strategy aims to achieve an IRR of 20% to 25% consisting mainly of capital appreciation generated through operational and asset enhancements. In both cases the portfolios consist of farms that are diversified geographically, climatically and across different farming types. Our strategies offer exposure to assets likely to benefit from long-term secular themes such as population growth, changing dietary habits, growing middle classes, and water and conservation management.
The British Innovation Fund focuses on the commercialisation of research emerging out of UK universities. The Fund invests into both university venture funds and directly into spin-out companies.
Our agricultural investment team has created a “Buy & Lease Strategy” portfolio for investors seeking a reliable and steady income, through a carefully constructed diversified portfolio of established cashflow-positive farms in established agricultural regions. It is one of our key agricultural land investing strategies which gives the investor ownership of the land with all the exposure to land appreciation and a fixed return without the operational risk of running the farm.
The Buy-and- Lease strategy focuses on purchasing existing farmland and leasing to pre-identified established regional and international operators. The current focus of this strategy is predominantly in Australia and New Zealand, however Uruguay and Chile are also attractive geographies for the strategy.
The Fund is open-ended, in local currency, and has a 10 year minimum subscription. Rather than a typical investment management fee structure, MAI’s fees include a percentage of gross rentals and of the capital gains achieved (performance fee) over the life of the portfolio, subject to a hurdle of 5% per annum. In this way MAI is incentivised to maximise the income generating capacity of the portfolio.
The Global Diversified strategy invests across a diversified selection of carefully selected risk-adjusted opportunities in Agricultural Land.
The fund’s investment selection is predominantly driven by the growing demand for food commodities from Emerging Asia, in particular China. As such the core crops include grains (soya, sorghum), protein (beef, lamb) and dairy, with diversification offered through other selected specialist crops such as sugarcane, cotton and horticulture.
The strategy has a heavy focus on regeneration and improvement, with integrated risk management to enhance returns.
For the Global Diversified strategy one fee is charged by Milltrust at the Fund level, equating to 1 percent management and a 10 percent carried interest over a hurdle of 5% per annum. The life of the structure is expected to be 10 years, during which time all income and capital gains will be distributed after the initial investment period of 3 years.
Land value drivers:
British Innovation Fund
The British Innovation Fund invests into leading British university innovation venture funds and companies.
Investment in British Innovation has continued to grow in recent years. The UK’s technology sector received more investment than that of any other European country in 2016, with private equity and venture capital firms investing more than £6.7bn in UK based companies, up from £5.6bn in 2015. UK life science venture funding has seen a substantial increase in total investment amounts and average investment size over the past few years.
The current portfolio allocation is split between 3 companies; Roslin Technologies (University of Edinburgh), Oxford Sciences Innovation (University of Oxford), and Pragmatic Printing (backed by Cambridge Innovation Capital).
Roslin Technologies is the new Technology Commercialisation Company of the University of Edinburgh’s Roslin Institute. Based at Easter Bush Campus, the largest concentration of animal science expertise in Europe, Roslin Technologies exists to deliver breakthrough commercial solutions in the Animal Health, Breeding/Genetics and Animal Nutrition space based on the expert agricultural research of the Institute. Roslin Technologies offers opportunities for investors looking to capitalise on the growing demand for food and agricultural products.
Oxford Sciences Innovation (“OSI”), is the world’s largest university venture company. Its’ vision is to turn a thousand years of world-beating science into the next generation of world-leading companies by linking Oxford’s research to the best human and financial capital. Through a contractual arrangement with the University, OSI has access to equity in all scientific spin-outs for up to 45 years. OSI’s CEO is Dave Norwood, an expert in IP commercialisation, having spun out 3 tech unicorns to date. Amongst OSI’s investors are some of the world’s best known tech names as well as research institutions and sovereign funds.
Pragmatic Printing is a world leader in the manufacturing of ultra-low cost flexible integrated circuits. It has the potential to revolutionise the supply chain of fast moving-consumer goods companies by connecting their products to the internet of things. Pragmatic’s capabilities offer potential throughout a vast range of devices and applications, ranging from RFID tags and other forms of Near Field Communications (NFC) such as smart cards, through to smart packaging and almost any device that may need to connect to the Internet of Things.
The Fund will place particular emphasis on direct investments in spinout companies arising from co-investment opportunities developed with JV companies and venture funds in which the Fund has invested.