The New Mexico State Investment Council (NMSIC) has made its first Brazilian agricultural investment after committing $75 million to Brookfield Asset Management’s Brazil Agriculture Fund II. Brookfield is targeting a corpus of $500 million for the fund, which will have a focus on grain production and crop land conversion, including partially converted cropland and pastureland to the production of soybeans and corn. Geographically, the fund, which has not made any investments yet, will seek out investment opportunities in Brazil’s Cerrado region, which lies in the center and north of the country, and includes areas within ten states.
For NMSIC, the investment in Brookfield’s Brazil Agriculture Fund II will increase the sovereign wealth fund’s diversification within its portfolio, according to Vince Smith, deputy state investment officer, who adds, “Another benefit is that the targeted returns for the commingled fund are very attractive.”
Limited partners are estimated to garner a 20% gross and a 16% net internal rate of return (IRR), and the exit strategy for the fund is a sell-off of assets to strategic or financial investors over a period of time of up to four years.
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