AAM Agriculture Fund recognised by Evergreen

Evergreen Ratings, the specialist alternative investment research firm, has rated the AAM Diversified Agriculture Fund (ADAF) “highly commended” due to its “fresh investment avenue into the Australian agriculture sector”.

Launched in January 2020, ADAF is the diversified, closed-ended fund with a $600 million portfolio operating at scale across diverse geographic regions and five commodity supply chains, will be close-ended for seven years (as well as three possible one-year extensions), and is open to wholesale and sophisticated investors with a minimum investment amount of $100,000.

It aims to deliver a distribution yield of 7% a year, paid quarterly, and a total return exceeding 12 percent per annum over the seven years.

Evergreen noted ADAF was a relatively new product with a short performance track record, with a total investor return for 2021-22 of 18.2% and a cash distribution of 6.7%.

“We believe ADAF provides access for investors to be part of the Australian economy that has previously been the realm of primary producers and private market players,” Evergreen Founder and Director, Angela Ashton, said.

“While co-mingled, unitised pure farming and cultivation land and operational investments are uncommon. This vehicle also has a wide exposure footprint, both in terms of individual asset sizes, sources of its revenues and, ultimately, risk characteristics.

“Those investors who can accept the unique or cyclical risks often present in agriculture by taking a wider view that they may not apply to the entire portfolio at the same time will see the direct benefits of this product’s wide diversification.”

The Evergreen report noted that the 2021-22 return highlighted “the importance of portfolio diversification across geographic regions and commodity supply chains, with the positive trading conditions for cattle and timber more than offsetting the losses generated from the significant wet seasonal conditions experienced at some sites and higher energy costs for the poultry farms”.

According to the report, the long-term goal of ADAF was to create an institutional-scale diversified agricultural portfolio across Australia, by taking “a ‘paddock to plate’ view of the supply chain with the entire range of its holdings in land and operational assets, seeking to incrementally add value where it makes opportunistic or strategic sense to integrate into that line of agribusiness or commodity production”.

The current fund structure is:

• Southern Cross Poultry – 44.1% of Australia’s second-largest chicken meat producer.
• Sunshine Farms Aggregation – a blended livestock and cropping of irrigated and drylands properties.
• Australian Livestock Company – currently a large-scale vertically integrated cattle and sheep production operation.
• Australian Softwoods Company – three sustainable timber businesses.
• Manbulloo Aggregation (MA) – a portfolio of assets in the NT.
• Northern Livestock Company will operate in conjunction with MA – created after the long[1]term lease was acquired for Maryfield Station and Limbunya Station in the NT.

The firm said a retail version of the fund was also available for advisers with a minimum investment of $10,000, with an investment timeframe of five to seven years.