The 16,000-hectare farm which Första AP-fonden bought in Australia in December was one of a clutch of purchases of farmland, worth some
$100m, by the pension fund.
The Swedish fund, which manages some E30bn in pension
savings, revealed that it "invested in about 15 agricultural properties in
Australia, and a dozen agricultural properties in New Zealand".
The New Zealand farms alone cost SEK333m ($52m), the fund,
known as AP1, revealed in its the annual report.
The properties included eight dairy farms totalling more
than 3,200 hectares bought from the empire of Graeme Hart, a former truck
driver who, through his Reynolds packaging empire, has risen to become
Australasia's richest man, with a fortune estimated last week by Forbes at
While AP1 did not detail the acquisition cost of its
Australian purchases - bought through a subsidiary named First Australian
Farmland, and managed by Victoria-based AAG Investment Management – it valued
the division's new investments at SEK311m ($49m).
That takes the total value of its farmland deals last year
to about $100m.
The Australian farms purchased were "mainly grain, meat,
wool and milk" producers, with the New Zealand operations "concentrated in milk
production", AP1 said.
The group in December purchased a 16,000-hectare farm near
Henty in New South Wales, for a price believed to be about $7m.
'Stable and safe
The fund said that the shift into farmland represented an
effort to diversify risk, and tap into an asset which has historically shown
little correlation with mainstream financial investments, so limiting the damage
to the overall portfolio from a setback in markets.
"Over the past four years, the fund has taken advantage of
investment opportunities that arose in the aftermath of the financial crisis,"
"The purpose of the agricultural investment is to provide long-term
stable and safe returns and, through a different pattern of returns, complement
to the rest of the portfolio."
The fund also sees gricultural investment as a hedge against climate change. Its research had shown that climate change and its influence on investment can have a crucial impact on the fund's long-term returns.
"One way to reduce climate risks in the portfolio is to invest in 'climate-smart' assets ," including farming, "to make the return on the fund's portfolio less sensitive to climate change".