Agrarius impact update: 78 million kilograms traded, 11.5% return for investors!

The objective of Agrarius is to transform the global agricultural sector from an extractive economy to a circular economy, by mobilising pools of capital for investments that meet both sustainability criteria and investor return targets.

The investment case for agriculture stems from the fundamental principle that the agricultural sector forms the foundation for a nation’s prosperity.

Factors such as evolving lifestyles, climate change, and the rise of the middle class are pivotal drivers of agriculture.

The World Bank Group notes in a recent publication that “growth in the agriculture sector is two to four times more effective in raising income among the poorest compared to other sectors”.

Yet the agricultural sector is massively under-invested due to unfamiliarity with the sector and difficulty to access at scale, while unfairly being branded as too risky. At 27four, we believe that our extensive investment and agriculture experience positions us to be able to deal with the complexities of the sector and to take advantage of inefficiencies that cause mispricing, creating a unique source of return for our investors.

So, who is Agrarius suited for? It is suitable for investors who have limited alternative investment opportunities, especially in the regulated space, and are looking for a low-risk portfolio of diversified, asset-backed debt investments with a medium-term time horizon. The investment has a genuine impact on investing in the systemically important agricultural sector, including in rural areas, and invests across the entire agriculture value chain, with the overlay of being listed on the sustainability segment of the JSE, further creating specific sustainability KPIs to be met through the investments we make.

In the inaugural issue of the note programme completed in October 2022, we raised R500 million in the first tranche, the proceeds of which were invested across 7 different underlying counterparties, resulting in the following achievements:

• exposure to 11 different underlying commodities;
• through our capital, 78 million kilograms of produce and 2000 units of livestock were traded;
• 60% of the portfolio met certified impact goals, in line with targets set for the period; and
• an ever-evolving deal pipeline which currently stands at +R1 billion.

The profit participation rate is 3 months JIBAR + 4.75%, with coupon payments distributed semi-annually from 30 September 2023. The return paid to investors in the first coupon payment was 11.5% in September 2023, for a period of 11 months, outperforming many asset-class benchmarks.

In the news…..

During September 2023, an announcement was made that Agrarius has concluded transaction agreements to fund the acquisition of 100% of the Capespan Group (excluding the pome farming unit), which is a diversified fruit grower, packer and distributor of fresh fruit, for R550 million. Agrarius is currently planning to complete its second issuance, the proceeds of which will supplement the existing portfolio with the primary utilisation of proceeds being to fund the Capespan transaction.