A British fund manager is poised to invest in Australian agribusiness projects after a successful capital raising in London last week.
Radicle Projects has raised $36.2 million from European institutional investors through secured convertible notes that are due in 2012.
Radicle chief executive officer Tim Bennett told Money Management the manager would now start to look at investing the funds in established managed investment schemes.
“We will only be buying assets from existing investors in schemes who want to get out,” he said.
“We are looking at schemes that are generating, or will generate, internal rates of return of between 16 to 19 per cent.”
The manager is focusing on horticultural schemes, although Bennett has not ruled out some forestry investments.
Radicle had previously invested in Queensland Paulownia Forests’ Australian Hardwood project that went into administration earlier this year.
In an agreement with QPF last week, Radicle will be returned $1.28 million of its funds that were held in trust with the remaining $220,000 used to purchase equipment from the administrator.
This equipment will be used to maintain the operation of the project. A new responsible entity is expected to be appointed soon.
“This is a positive outcome for us in that the project assets are secure and under new management,” Bennett said.
“In addition, we believe the arrangement with QPF will offset any potential write-down value of the QPF shares held by Radicle.”
The new investments by the UK manager will be made from a list drawn up by agribusiness research house Adviser Edge.
“Adviser Edge has come up with a list of about 30 potential projects that have been established in the past 10 years,” he said.
“We will look at these projects and with Adviser Edge come up with some valuations looking at future cash flow.”
Bennett said they favour horticultural projects because of the quicker returns, although some tree projects with mature trees due for harvesting in the next couple of years have not been ruled out.
“We are not a vulture fund looking for distressed assets,” Bennett said.
“We want good quality investments that are going to deliver a return, but the investor wants to get out for whatever reason.”
Radicle has been given an FSR licence to deal in secondary agribusiness MIS assets by ASIC, which is the first to be issued in Australia.
Despite gaining an FSR licence, Bennett said the company will not be raising any capital from Australian investors.
“It is a UK publicly listed company that wants to raise capital to enable institutions to invest in Australian agriculture,” he said.
“The Australian office in Melbourne will only be buying assets for the London company.”
Radicle was formed in 2004 and listed on the London AIM market in 2005. Bennett is no stranger to Australia having been head of agribusiness research at Property Investment Research until he left to join the UK fund manager.
