Investment opportunities in agriculture
WAM Alternative Assets (ASX: WMA) provides retail investors with access to a range of alternative assets through a diversified portfolio.
These assets include real assets, private equity, real estate, infrastructure, and private debt.
Australia's agriculture and irrigation sector offers a distinctive investment opportunity within the realm of alternative assets. WAM Alternative Assets invested with Argyle Capital Partners, an investment partner that invests in Australian water entitlements and agricultural assets.
The Argyle Water Fund invests in the ownership and on-going management of a diverse portfolio of perpetual water rights across a range of river systems and aquifers. Water rights represent a perpetual title to receive water every year from these water reserves, with these annual allotments referred to as water allocations.
The economics of scarcity
The Argyle Water Fund can generate returns for investors in a variety of ways. Water rights are valued on the basis of their long-term access to water, and as such the Fund benefits from the long-term capital growth driven by scarcity of those resources and growing demand. The Fund is also able to generate income by selling or leasing water allocations to farmers. The spot price of annual water allocations changes depending on current and anticipated weather conditions.
For instance, record rainfall and oversupply of water into the southern Murray Darling Basin saw water allocation prices fall to near zero by the end of the 2022/23 water year. More recently, water allocation prices have reached $175 per mega-litre due to increasing concerns of farmers about a prolonged El Niño dry period for the 2023/24 water year. In the past, water prices have previously risen to $1000 per mega-litre in the peak of drought years.
The farm gate
Argyle Capital Partners also invests in agricultural assets and businesses with the aim to optimise farm productivity and generate sustainable returns.Growing crops such as almond or citrus requires four or five years of patient capital before the trees mature to harvest and cash flows can be generated. More broadly, over the last 10 years Australian farmland values have increased by 195%, even before accounting for the income generated from the land.
Real assets like water
rights and agriculture have unique characteristics that add value to a
diversified portfolio through providing further diversification benefits,
inflation protection and benefit from the long term theme of growing demand for
food globally.
Argyle Capital Partners' Managing Director and Chairman Kim Morison
The WAM Alternative Assets investment portfolio’s exposure to water entitlements and agriculture is managed by our investment partner, Argyle Capital. Watch a short video where Kim explains more on what Argyle Capital does and the benefits it brings to its investors.A more in-depth discussion on real assets with Kim and Palisade Investment Partners Managing Partner Vicki Rigg can be watched here.
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Dania has held senior investment roles in Australia, the US, Europe and the UK throughout her 24-year career. Dania joined Wilson Asset Management in 2020. Previously, Dania was Head of Real Assets Australia and held other investment roles at WTW in London, New York and Sydney. Prior to that Dania was at Russell Investments working for their Real Estate Investment team in the US and the UK.
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Disclaimer
Wilson Asset Management and their related entities and each of their respective directors, officers and agents (together the Disclosers) have prepared the information contained in this email in good faith. However, no warranty (express or implied) is made as to the accuracy, completeness or reliability of any statements, estimates or opinions or other information contained in these materials (any of which may change without notice) and to the maximum extent permitted by law, the Disclosers disclaim all liability and responsibility (including, without limitation, any liability arising from fault or negligence on the part of any or all of the Disclosers) for any direct or indirect loss or damage which may be suffered by any recipient through relying on anything contained in or omitted from this email. This information has been prepared and provided by Wilson Asset Management. To the extent that it includes any financial product advice, the advice is of a general nature only and does not take into account any individual’s objectives, financial situation or particular needs. Before making an investment decision an individual should assess whether it meets their own needs and consult a financial advisor.
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Dania has held senior investment roles in Australia, the US, Europe and the UK throughout her 24-year career. Dania joined Wilson Asset Management in 2020. Previously, Dania was Head of Real Assets Australia and held other investment roles at WTW...
Expertise
Dania has held senior investment roles in Australia, the US, Europe and the UK throughout her 24-year career. Dania joined Wilson Asset Management in 2020. Previously, Dania was Head of Real Assets Australia and held other investment roles at WTW...
Expertise
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