PALMER CAPITAL INVESTMENTS (PCI) and Cambridge based BIDWELLS AGRIBUSINESS today announced the intended launch of a €300 million Pan-European farmland fund.

The Palmer European Farmland Fund (PEFF), which is set to go live in November this year, is designed to profit from the long-term rising world demand for soft commodities and the convergence in land prices for farmland between Western and Eastern Europe.

The investment vehicle is the largest product of its kind to date and is being positioned as the only direct investing, EU-based farmland fund for institutional investors.  

The fund is projecting an average net income return of 5.5% per annum over the 10-year fund life. When combined with the envisaged significant capital growth in land prices over this period, net returns are expected to be in the region of 10 – 15% per annum.

The Joint Venture (JV) brings together the long track records of PCI in real estate fund management in Western and Central Europe and the sector expertise, networks and management skills of Bidwells Agribusiness.

The fund management company, owned by the two organisations, will be run under the joint directorship of Guy Barker of PCI and Richard Warburton of Bidwells Agribusiness. The partners believe the fund provides significant benefits from the blend of expertise and believe it to be ahead of competitor products in terms of on-the-ground execution capacity.  

Guy Barker, managing director of PCI, said: "The fund will offer an exposure to the strong, long-term fundamentals of the soft commodity sector without the volatility associated with direct commodity investment. Essentially it is a real estate investment which is non-correlated to other mainstream property sectors. As assets will all be in the EU, it also avoids the political and economic risks of some of the more temperamental foreign land fund products.”

Richard Warburton, head of Bidwells Agribusiness, said: "The fund will invest the €300 million in good quality, arable, dairy and vegetable land in seven EU countries. Approximately 20% will go into supporting infrastructure and commercial forestry.

“Selection of assets will be key, requiring judicious assessment of land quality, its underlying agroecology and future potential, values against likely returns, as well as markets, supply chains and availability of logistics. Future-proofing long-term competitiveness and access to water resources is also important.”

Warburton commented on the imperfections in the current EU land market and the resulting significant opportunities. “There is great potential for investors, however, this doesn’t come without certain challenges in a number of countries including fragmentation of ownership from land reform, archaic tenancy legislation and foreign ownership restrictions. This JV brings together unprecedented understanding and expertise to be able to deploy funds and manage assets effectively.”

Barker added: "The intended launch of the fund has been received well. We aim to raise about €200 million of equity and have already had considerable interest in this innovative product from UK and German institutions resulting in €45 million of commitments to date.”