US agricultural investment vehicle Sustainable Farmland Trust PLC on Monday said it plans to float on the London Stock Exchange, saying it will offer shareholders a chance to invest in an asset that historically outperforms in inflationary environments.
The trust said its goal its to provide an ‘attractive level of risk-adjusted income’, as well as potential capital growth via investment in mostly US diversified farmland and other agriculture-focused assets.
It targets a net asset value annual return of 7% to 9%, and a dividend yield of at least 4.5%, both on the basis of the initial issue price.
The trust’s US-based investment manager, International Farming Investment Management LLC and its affiliates have over $2.2 billion in assets under management.
‘As a market leader in farmland investing, IFC has owned or managed approximately 420,000 farmland and ranchland acres across over 18 US states, two Australian states and Chile, cultivating more than 80 crop types,’ it said.
The trust will invest in assets held in the IFC Core Farmland Fund LP, which is a private fund managed by IFC’s investment management team. It will also invest in direct farming and agricultural supply chain and infrastructure assets.
Farmland assets are something of a safe-haven in turbulent economic times, the trust said.
‘Not only are returns from farmland assets historically negatively correlated to equity market movements, but they also exhibit a historical positive correlation with inflation and are anticipated to be accretive in a high inflationary environment.’
Sustainable Farmland is targeting gross initial public offering proceeds of £200 million via a placing, subscription offer and intermediaries offer. All will be priced at £1.00 per share.
US farmland is supported by long-term secular trends such as a rising global population, increasing global wealth, the globalisation of trade and consumers’ growing preference for ‘high quality, traceable, sustainable food’, the company said.
The market, however, is constrained by challenges including a limited supply of arable land, limited water resources and infrastructure, as well as facing issues related to climate change.
‘This combination of expanding demand for farmland and constrained supply of new acreage creates opportunities for farmland managers and investors,’ the trust explained.
‘We believe that the company is perfectly positioned for the current inflationary environment, with outstanding risk-adjusted economic returns while also providing a sustainable and appropriately managed food source. We believe this unique and highly scalable asset class has enormous potential to provide long-term returns from a combination of both income and capital growth that historically outperform further in an inflationary environment,’ Chair Andy Crossley commented.
Crossley has served as a UK small cap fund manager for over 20 years, mostly at Invesco Perpetual. He was senior independent director at City of London Group PLC from 2015 to September 2021.
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