July 24, 2023

By Lynda Kiernan-Stone, Global AgInvesting Media

Anchor Capital is looking to raise between 1.5 billion – 3.5 billion South African rand (approximately US$84 million – US$200 million) for its Anchor Ndalo Fund – a newly launched investment vehicle designed to give investors exposure to niche elements of the agricultural sector. 

Created as a joint venture between Anchor and expert farming advisory business Primocane Capital, the fund’s investment mandate is to provide a balanced portfolio of well-managed, diversified assets able to produce income in the face of traditional risk factors.

Supported by the belief that carbon neutrality is achievable at the farming level and throughout the entire value chain from farm to shelf, the fund’s objective is to achieve carbon neutrality and to support the United Nations SDGs 2030 and the objectives of the National Development Plan 2030. 

With a strong focus on vertical integration, Anchor stated that the fund is distributing risk between geographies, complementary superfood crop types including blueberries, avocados, cherries, and citrus, and strategies: green fields, expansion, and established, highly successful commercial farms. It also will examine investment opportunities in cold storage, pack houses, manufacturing, processing, and logistics. 

These assets, of which primary agriculture would account for 30 percent, will be overseen by an experienced and professional team of technical farming advisors tasked with ensuring alignment at farm-level decision making with the interests of investors in mind. 

“The Fund delivers focussed impact (ESG) whilst delivering private equity equivalent returns to investors,” stated Anchor. “Investors do good by investing in the fund without sacrificing returns.”

Mind the Gap

The launch of this fund is also occurring at a time when available financing in the country has been bottlenecked. 

It was back in 2020 when Land Bank, a South African state-owned agricultural lending bank, defaulted on payments on two bond programs with a combined value of US$2.62 billion (50 billion rand) at the time.

In 2019, Land Bank carried a gross loan book of approximately 45.2 billion rand, or US$2.48 billion today, reflecting a market share of 29 percent of the country’s agricultural debt, according to Agri SA. 

However, Land Bank was only one of several state–owned enterprises facing financial challenges, reflecting an overall atmosphere of instability, including a gap in funding access to the country’s farmers.

“Food security is a global initiative,” stated Anchor, which manages more than R110 billion (US$6.2 billion)  in assets, “…and the fund seeks to allocate private capital into the superfoods production value chain at a time when it is both desperately needed and where the growth prospects and consequently the return for investors are the highest possible in this sector with the lowest risk profile.”

Anchor is not the only firm looking to step into the gap left by South Africa’s failing lenders. Last year, RMB, a leading African corporate and investment bank, announced its launch of the Agri Harvest Platform – a first-of-its-kind vehicle to facilitate funding for the agricultural sector to ensure food security for the country. 

“The new platform bridges the funding gap between the farmer and the investor,” said Chris Alderson, co-head, debt & trade solutions at RMB, at the time. “We believe that it will be a key enabler for the agricultural sector and with this sector being the bedrock of food security, it is vital for the social-economic fabric of South Africa.”

~ Lynda Kiernan-Stone is editor in chief with GAI Media, and is managing editor and daily contributor for Global AgInvesting’s AgInvesting Weekly News and  Agtech Intel News, as well as HighQuest Group’s Unconventional Ag. She can be reached at lkiernan-stone@globalaginvesting.com.

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