MERRICKS Capital has launched an asset-backed agriculture credit fund, bringing investor exposure to agriculture industries and supply chains.
The fund manager and investment specialist’s new Merricks Capital Agriculture Credit Fund is aiming to reach $500 million in its first year, while providing wholesale investors exposure to Australian and New Zealand agriculture industries and associated supply chains.
In the long term, it aims to become a multi-billion dollar fund, utilising Merricks Capital’s history in the agricultural sector, as a farm owner, investor and commodity fund manager.
“We are bullish about the medium and long-term growth prospects of the agriculture industry, which we believe is poised to reap the benefits of a positive seasonal outlook, favourable market conditions and commodity prices, growth in land value and continued on-farm productivity improvements,” said Adrien Redlich, CEO.
According to Redlich, with investors in mind this is the perfect time to launch the fund, with the agriculture industry looking to take advantage of current market and economic conditions that have left the sector ready for growth.
“Currently, banks have a 95% market share of the $A140 billion agriculture lending sector in Australia and New Zealand but traditional lenders have struggled to understand the cyclical nature of agriculture and manage this against their own inflexible capital structures,” added Redlich.
As a flexible, fully-funded lender Merrick Capital is in a position to benefit borrowers and investors, while also leveraging its expertise in dairy, horticulture, livestock, broadacre farming, food processing and associated supply chain integration.
“Regulators in both Australia and New Zealand continue to target banks’ over-exposure to agriculture with strict loan servicing requirements resulting in traditional lenders continuing to pull back from the industry.”
“But our rich heritage in agriculture means that we are one of the few Australian non-bank financiers that is able to deploy capital to agricultural businesses. The absence of numerous competitors offering similar agility in an industry that is starved of capital are both preconditions for compelling risk-adjusted returns for investors,” added Redlich.
In line with Merricks Capital’s policies, investments in the portfolio will be secured by physical assets, supporting fund diversification, as well as mitigating risk for investors.