Canadian Buyout Firm Launches Farmland Fund

Mar 20 2008 | 12:40pm ET

Alberta, Canada-based Mosaic Investments has launched what it bills as the only private equity fund of its kind in Canada focused on acquiring farmland primarily in the provinces of Alberta, Saskatchewan and Manitoba.

The firm has raised C$3 million in seed capital for the Agcapita Farmland Investment Partnership and expects a first closing at of C$10 million in May. Mosaic has also finalized a third-quarter launch of a separate C$50 million fund, following the same strategy as its retail predecessor, open to institutional investors.

According to investment director Stephen Johnston, Agcapita captures both operating and capital appreciation returns by acquiring a portfolio of farmland, which it leases to operators on a cash rent and crop-sharing basis.  

The fund is banking on the fertility and low cost of its targeted Canadian farmland to turn a profit. According to the firm, Canada is the third-largest wheat exporter in the world and in aggregate one of the largest agricultural producers in the world. Other factors such as farming infrastructure, low political risk and strong global macro drivers should also play in favor of the fund’s risk/return parameters.

Mosaic currently manages two other p.e. funds: The first focuses on cash flow positive Western Canadian business with direct or indirect exposure to commodity prices (target investment of C$3 to C$5 million) and the second focuses on commercial real-estate in non-major centers in Western Canada–primarily warehouses and office space. 

Investment directors John Mackay and Harold Kunik round out Mosaic’s management team.

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