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March 31, 2010

South African firms launch $408 million farmland fund

Two South African asset management firms launched a 3 billion rand farmland investment fund on March 24 that is expected to help boost agricultural development in Africa's biggest economy.

The Futuregrowth Agri-Fund, launched by Old Mutual South Africa unit Futuregrowth Asset Management and UFF Asset Management, plans to tap institutional investors for the cash, which will be invested in farms in South Africa.

"Typically, the fund will purchase a farm, retain the workforce and appoint a professional operator with a strong marketing and distribution network," Erwin Bouland, Investment Manager at UFF Asset Management said in a statement.
"Access to working capital will be sourced by the operator."

South Africa has one of the continent's most developed agriculture sectors and is Africa's top maize producer as well as the third largest wheat grower.

The companies said the fund will invest in farmland, agri-businesses and farming infrastructure related to the land.

"In addition, the fund has a strong socially responsible component. Benefits to farm workers and the broader rural community include employment, skills transfer, healthcare, education, access to services and housing," Futuregrowth Fund Manager, James Howard said.

He said the fund would target local and international state-owned and private pension funds as well as local development institutions.

"It will provide access to stable, long-term returns within the context of continuing development in the agricultural sector," Howard said.

Investors have taken a keen interest in farmland across Africa since food shortages in 2008 triggered global food price spikes.

Interest in farmland investment has also been spurred by losses incurred by money managers during the financial crisis of the last two years.


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