One of the world's largest investors in private equity funds, Swiss group Adveq, has taken the apparently unusual step of buying directly into the Australian almond business, securing what is one of the largest farmland acquisitions anywhere in the world over the past year.
The group confirmed it had completed the purchase of 18,000ha of almond orchards in Victoria, Australia for A$211m (US$190m) by setting up the Adveq Almond Trust II in partnership with the Municipal Employees' Retirement System of Michigan and Danish fund Danica Pension – its first such joint investment in so-called real assets.
The orchards are currently operated by Olam Australia and account for approximately 50 per cent of the country's total production, or 3.5 per cent of the US$5bn worth of almonds sold worldwide in 2013.
With global almond supply reportedly falling as production costs rise in California, the world's largest supplier with around 80 per cent of the global volume, the drupe seed (commonly categorised as a nut) is set to be in strong demand over the coming years.
Berry Polmann, executive director of Adveq Real Assets, said the group was happy with the deal. "We are pleased to have kick-started our co-investment platform with almonds, the king of crops, and have like-minded co-investors alongside us."
According to Polmann, institutional investors are attracted to farmland investments for their "diversification benefits" and "long-term inflation protection".
He added: "In addition, investors require sustainable performance, in an asset class that might be challenging to access. In the words of Mahendra Shah, former Director of Qatar National Food Security Programme, 'the best investment of any crop would be almonds, the nearest second best crop being pistachios'."
The transaction is based on a sale and lease-back deal for the orchards, which are located near the Murray River. At present, around 12,000ha are planted with approximately 3m trees.
"Responsible and sustainable practices are a key element of our investment philosophy," commented Gaia Arnaboldi, executive director of Adveq Real Assets. "We will partner with Olam, who will continue to operate the orchards, to ensure these remain at the forefront of sustainability practices in the delicate Murray River ecosystem."