July 22, 2024

By Gerelyn Terzo, Global AgInvesting Media

Building on a trend set in motion by the Development Bank of Japan (DBJ), Sumitomo Mitsui Trust Bank (SMTB) has committed to invest in Laguna Bay Fund 2, overseen by Brisbane, Australia-based Laguna Bay Group. Tokyo’s SMTB has signed on as an impact equity investor as part of a broader strategy in which it has been supporting solutions to social problems for the past two years, a mission that is aligned with Laguna Bay’s investment focus on a trio of themes – rising food demand, decarbonization and costs.

The investment by SMTB can be considered a coup for Laguna Bay in light of the fact that the Japanese fiduciary is required to be highly selective in the manner in which it invests corporate pension funds. SMTB’s allocation adds to the Land of the Rising Sun’s representation in the Laguna Bay fund after the DBJ made history as the maiden Japanese investor to back the fund last year, at which time the Australian investment firm reportedly set its sights on Japanese LPs. At the time, DBJ revealed its intentions “to gain advanced know-how to solve agriculture issues that are arising in developed countries, fostering further contributions to the industry’s next phase of growth.”

Australia’s farming industry is at at the precipice of a sea change, with many of the country’s growers nearing retirement age. As the torch is passed to younger generations, “harnessing economies of scale is not just a necessity, but a paramount imperative for closing the knowledge and skills gap and shifting to broad adoption of modern agricultural technologies,” according to Laguna Bay Managing Director and Founder Tim McGavin. He points to solutions like precision farming, automation and data-fueled decision-making as the keys to bolstering both productivity and sustainability in Australia’s ag industry.

Launched in 2010, Laguna Bay has grown to become one of Australia’s preeminent food and agriculture investors, and according to its latest sustainability report is raising capital for its third investment vehicle in the food and agribusiness sector. While the firm considers its mandate to be broad, it considers investments across upstream, midstream and downstream operations, including crops, row crops, livestock, dairy, water, protein and aquaculture with an underlying theme of sustainability and food security.

Laguna Bay is keenly aware of the carbon footprints of all of its holdings, owing to a baseline assessment made on assets in its Fund 1 and Fund 2. This insight allows the firm to manage and lower its environmental impact for a more sustainable future. Among the companies Laguna Bay has backed is Cutri Fruit, which grows, packs and markets premium stone fruits like nectarines, peaches and plums, selling directly to buyers.

Laguna Bay has invested in Fogarty Wine Group, a vertically integrated wine business with vineyards and processing operations sprinkled across New South Wales, Western Australia, Victoria and Tasmania. Fogarty Wine has slashed its water usage owing to the automation of 75 percent of its irrigation systems that minimize evaporation and maximize benefits. In June 2023, Laguna Bay acquired Coolabah Turf, a turf supplier operating in Echuca, into Fund 2.

Laguna Bay is famous for having sold Australia’s biggest almond portfolio to Canada’s Public Sector Pension Investment Board (PSP Investments) in 2019 for more than A$350 million (US$240 million). Meanwhile, in 2022, the Laguna Bay Fund 2 received a A$350 million (US$250 million) commitment from the Washington State Investment Board.

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