Fresh from raising $2.7 billion for an Americas infrastructure fund, Toronto-based Brookfield Asset Management is looking to raise another real-assets focused fund: a $400 million investment vehicle that will buy up agricultural land in Brazil.
The fund would be Brookfield’s first private investment fund focused exclusively on agricultural land, but it would not be a first for the industry: Sydney-based Macquarie Group has previously raised an Australia-focused pastoral fund focused on buying up land for cattle and sheep farming.
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Brookfield has pledged $100 million of its capital toward the Brazilian fund, formally called the Brookfield Brazilian AgriLand Fund. The AgriLand Fund will buy up pasture lands in Brazil and convert them to crops.
Brookfield will target a 20 percent to 25 percent internal rate of return on the fund, though its existing agricultural investments in Brazil have earned only a 15.3 percent internal rate of return since 2000, according to the memo.
Brookfield will try to hedge the volatility of the fund’s cashflows by entering into land lease agreements with agricultural product distributors, negotiating take-off agreements with buyers or hedging prices using commodity futures.
The investment staff of the San Diego County Employees Retirement Association recommended a $75 commitment to the AgriLand Fund from the natural resources portion of its real assets portfolio.
The real assets portfolio includes natural resources, targeted at 12.25 percent, and infrastructure, targeted at 5.25 percent.
Last month, Brookfield gained a $75 million from the pension for its Americas Infrastructure Fund, which took the fund to a final close on $2.655 billion. The commitment left San Diego with 1.35 percent of “room for more additions” in its infrastructure portfolio, according to the memo.
If the pension’s board approves the AgriLand commitment tomorrow, San Diego will have 9.35 percent “room for more additions” in the natural resources portfolio, the memo said.