An investment model that addresses rural economic development was announced today. The Futuregrowth Agri-Fund launched by Futuregrowth Asset Management and UFF Asset Management, seeks to give investors direct investment exposure to agricultural land. The South African fund aims to raise R3-billion from institutional investors, including retirement funds, by December 2011.

The fund will invest in agricultural land, agri-businesses and farming infrastructure related to the land and aims to deliver a market related return of CPI +10 percent. The new fund, which delivers significant social impact, complements Futuregrowth's existing suite of socially responsible investments (SRI).

The aim of the fund is to create a market driven response to land reform, which remains a key economic and social issue in South Africa. In addition, the fund has a strong socially responsible component. Benefits to farm workers and the broader rural community include employment, skills transfer, healthcare, education, access to services and housing.

Access a pool of assets

Agricultural development also addresses food security, land development, conservation and environmental issues.

Futuregrowth Fund Manager, James Howard, said the new Futuregrowth Agri- Fund will provide investors with a unique opportunity to access a pool of assets not available to institutional investors.

"Target markets for the fund include local and international state-owned and private pension funds and local development institutions. It will provide access to stable, long-term returns within the context of continuing development in the agricultural sector," said Howard.

Investment manager at UFF Asset Management, Erwin Bouland, said that this model has been successfully implemented in the fruit export business.

"Typically, the fund will purchase a farm, retain the workforce and appoint a professional operator with a strong marketing and distribution network.

Linking farms directly to markets

This includes long-standing sales contracts with supermarkets and buyers thus linking the farm directly to the markets. Access to working capital will be sourced by the operator."

Kuseni Dlamini, CEO of Old Mutual SA and Emerging Markets said: "It is very encouraging to see such innovation at work in addressing the crucial issues of rural economic development, a key strategic priority for the government for the next five years. Old Mutual is pleased to be one of the partners in this venture through our investment boutique, Futuregrowth, because we are committed to being active participants in the growth and development of South Africa. We are looking forward to future partnerships to address the socio-economic challenges our country faces and sustain South Africa's economic recovery."

Howard concluded: "This is a unique South African opportunity for institutional investors to participate in an investment that ticks a number of social and economic development boxes while benefiting from attractive financial returns and diversification underpinned by credible partners."

Join our Facebook fan page Follow Business on Twitter

I-Net Bridge

RSS
Digg
de.li.cious
facebook
'Give blacks their share' farm tractor Giving 40% of white owed farms to blacks is a "small donation in the name of justice".
A striking World Cup Municipal striker The country's striking season is clashing head-on with FIFA's World Cup spectacle.
Expats' skills in demand Many multinationals are using expats to transfer skills to local staff, especially in EMs.