Background

Agriculture is second only to land as the most ancient investment. Together, land and agriculture have outlasted most other investments as preservers of wealth and long-term generators of cash-flows. Yet to many institutional investors the rewards from agricultural investment have been marginal.

Brookvine had longstanding experience in agriculture, having been a shareholder of a funds management firm investing in Australian water entitlements. We were struck that a group of top tier farm operators (reasonably) consistently achieved outsized returns from the asset class.

We also noted the majority of income growth and unmet food demand is expected to occur in Asia. This provides Australia and New Zealand with the clear advantage of proximity re-enforced by trade and cultural connections. There is also the benefit of seasonal differentiation to food products produced in the northern hemisphere.

Laguna Bay was established in 2010 on the back of a successful track record of syndicated investments in a broad range of agriculture sectors. In 2015, Brookvine was engaged as the lead global placement agent for Laguna Bay’s first commingled agriculture fund (LBAF1). The aim was to capitalise on Laguna Bay’s local knowledge and relationships, its successful contrarian investment strategy, and its ability to creatively structure solutions for top-tier farm operators across Australia and New Zealand.

Challenge

We embraced the challenge to help ‘institutionalise’ Laguna Bay by taking a desirable investment offer to market globally while preserving the company’s entrepreneurial flair, values and client focus. We also recognised the need to advocate widely for an investment in Australian agriculture, as there had been a dearth of institutional investment in the asset class.

As well, we needed to help design and structure an investment vehicle to align with successful investment in the asset class, and satisfy investors who desire an enduring exposure to the asset class as well as those that require occasional liquidity.

What Brookvine did

We worked with Laguna Bay to build and consolidate an institutional investment platform, including the formalisation of investment processes and disciplines and the documentation of operating policies and procedures.

We then partnered with Laguna Bay to develop the overall fundraising objective and strategy for the fund, the most suitable terms and conditions for investors as well as marketing and negotiating tactics for the fundraising. We developed the fund raising materials, including an offering memorandum, presentation book, due diligence book, data room and other supporting materials, and refined and articulated the arguments that support investments in Australian agriculture.

We coordinated an active, high-touch distribution campaign to raise institutional capital from Australia & New Zealand, North America, Europe and Asia.  We facilitated active on-site meetings, dialogue and correspondence with investors, prospective investors and consultants.  Our pre-marketing preparations were exhaustive. To instil confidence and inspire potential investors with Laguna Bay’s thought-leadership, we also co-authored a number of white papers and research notes on agricultural investing.

The Outcome

Laguna Bay is a widely-recognised real assets fund manager with A$310m raised at the second close of the Laguna Bay Agricultural Fund 1. The thorough bookbuild and investor database from the first fund-raise are key assets to set Laguna Bay up for efficient and successful subsequent fund-raising.

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