THE INVESTMENT
OPPORTUNITY
THAT’S CALLED
FOOD SECURITY
OLD MUTUAL AGRI FUNDS
July 2016
2
Source: Google Maps 2015
3
4
Translating Food Security Into An Investable Option For
Institutional Investors
■
■
5
Investors with a long-term horizon are looking to increase their allocation to
real assets such as farmland:
−
Economic turbulence globally
−
Low interest rate environment
−
Search for safety as well as yield
Agriculture is compelling for international investors seeking stability and
higher risk-adjusted returns:
−
Availability of low-valued, premium farmland and Agribusinesses on
the continent
−
Shortage of locally available capital
−
Addressing a vital interest of their constituency being food security
How Do We Deliver This To Investors?
This real estate investment model has been designed for institutional asset owners
Old
Mutual
Agri Fund
Purchase
farm
Fund
appoints
operator
Operator leases
farm
Pays coupon
to fund
Improve and
expand farm
Exit/evergreen
investment
R
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Good Risk/Return Characteristics
Adding Agri to a pension fund could assist in what might be a lower return,
more volatile local and and global equity market over next five years…
Private equity &
venture capital
Listed equities
Expected return
Commodities
Agricultural
Real assets
Project
finance
Trade
finance
Expected risk
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Source: Valoral Advisors, January 2015 Global Food & Agriculture Investment Outlook






Undeveloped farmland
Developed farmland
Row crops
Permanent crops
Cattle raising
Dairy
Annual Amount Of Income Spent On Food
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Source: Washington State University
African Agriculture Socio-Sustainability Impact
African Challenges
R
Food security
9
Job creation
Country security
Invest local
Low crop yields
and degraded
soils
Pressure on natural
resources
10
0.45
9
0.40
Population in billions
8
0.35
7
0.30
6
0.25
5
0.20
4
0.15
3
0.10
2
1
0.05
0
0.00
1960
1970
1980
1990
World population (lhs)
10
10
2000
2010
2020
2030
2040
Arable land in hectare/capita (rhs)
Source: Population Division of the Department of Economic and Social Affairs of the United Nations Secretariat
2050
Hectare of arable Land per capita
Arable land per capita
Africa, The Overall Agriculture Opportunity
With over 60% of the world’s arable land, we believe the Africa Agri investment case
is very compelling with significant investment capacity…
65% of Africa’s labour
force
32% of Africa’s
GDP
Food imports in excess
of US
$25bn p.a.
OL Mutual’s investment:
Over R2bn*
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Source: Old Mutual Investment Group | * Africa and SA Agri Funds
The Impact
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In Sub-Saharan Africa, growth in
Agricultural investments have a two-
agricultural employment accounted
to four-times greater impact on
for half of all employment growth
poverty reduction than investments
between 1999 and 2009
in any other sectors in terms of GDP
Responsible Business Results To Date
Although USD returns and strong diversification are very important to our Agri
investment case, we also believe passionately in being responsible stewards, as
demonstrated by the impact we have had via our SA farm investments…
2360
Seasonal employees
800 Projected new jobs
450 Employees provided with housing
583 Permanent employees
(contracts longer than one year)
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241 Employees with access to
1500
primary healthcare
Employees receiving
basic agricultural training
241 Employees with access to
39 Employees receiving
HIV/Aids services
management training
181 Employees receiving adult
education
Turning Food Security Into a Highly Sustainable Investment
Opportunity
■ Retailers and traders are increasingly
looking to secure their supply lines
−
Balance of power is moving upstream to the
supplier of food, i.e. the African farmer
−
Security and long-term off-take by retailers
translates in more predictable and stable
cash flows, the ones that investors like
■ Growth in local demand and investment by
retailers across the continent creates
opportunities for local value chains
replacing unsustainable international food
logistic chains
■ Food independence for Africa can be
supported through investment by local
institutional investors as well as international
capital
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Africa Farmland Returns
Early investors will enjoy superior dollar running yields
9%
8.50%
8%
7.25%
7%
6%
5%
4%
3%
4.25%
4%
2.75%
2%
1.50%
1%
Africa
South Africa
Brazil
Western Europe
Australia
US
0%
This translates into a target return of 12% p.a. in USD
over the 10 year investment period
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Source: Farmland: SA Human Sciences Research Council, SA Deeds Office, Statssa, Alpix | December 2013 | www.ipd.com - South African Real Estate Index
www.msci.com - MSCI Global Equity Indices (ZAR denominated return) | www.jse.co.za - BEASSA total return indices, FTSE/JSE all share index
Hochland Farm Investment Story
 The farm was under liquidation when the
Fund acquired it in Oct 2011 for R41m
 Highly strategic positioning as earliest supplier
of stone fruit to local SA market, effectively
competing against imports
 The rationale for investment was the large
potential to develop the farm; 142 ha (could
be increased to roughly 200 ha of orchards)
 The farm is situated in Piketberg, Western
Cape and is 1 035 ha
 The primary crops are Apples, Pears,
Nectarines and Peaches.
 Citrus and Apple Expansion of 43ha and 19
ha respectively
 Farm linked to Greenery in the Netherlands
 Current market value of farm is R85m
 IRR to July 2015 is 16.1%
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DISCLAIMER
Futuregrowth Asset Management (Pty) Ltd (“Futuregrowth”) is a licensed discretionary financial services provider, FSP 520, approved by
the Registrar of the Financial Services Board to provide intermediary services and advice in terms of the Financial Advisory and
Intermediary Services Act 37 of 2002. The fund values may be market linked or policy based. Market fluctuations and changes in
exchange rates may have an impact on fund values, prices and income and these are therefore not guaranteed. Past performance is
not necessarily a guide to future performance. Futuregrowth has comprehensive crime and professional indemnity in place.
Performance figures are sourced from Futuregrowth, UFF and I-Net Bridge (Pty) Ltd.
This document is for information purposes only and is not intended as an offer or recommendation to buy or sell or a solicitation of an offer
to buy or sell a financial product or security. The recipient is advised to assess the information with the assistance of an advisor if
necessary, with regard to its compatibility with his/her own circumstances in view of any legal, regulatory, tax and other implications.
Personal trading by staff is restricted to ensure that there is no conflict of interest. All employees of Futuregrowth are remunerated with
salaries and standard short and long-term incentives. No commission or incentives are paid by Futuregrowth to any persons. All intergroup transactions are done on an arm’s length basis. Futuregrowth has comprehensive crime and professional indemnity insurance.
Futuregrowth prepared this document in good faith. Although the information in this document is based on sources considered to be
reliable, Futuregrowth makes no representation or warranty, express or implied, as to the accuracy or completeness of this document, nor
does it accept any liability which might arise from making use of this information.
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DISCLAIMER
Old Mutual African Agricultural Fund-I PCC (“the Fund”) has been authorised by the Financial Services Commission of Mauritius to
operate as a Closed End Fund under section 97 of the Securities Act of 2005.
Futuregrowth Asset Management (Mauritius) Limited (“Futuregrowth”) has been granted a CIS Manager License under section 98 of
the Securities Act of 2005 and the Financial Services Rules of 2008, by the Financial Services Commission of Mauritius. Futuregrowth has
been granted a Category 1 Global Business License under section 72(6) of the Financial Services Act, by the Financial Services
Commission of Mauritius.
UFF Management (Mauritius) Limited (“UFF”) has been granted an Investment Adviser (Restricted) License under section 30 of the
Securities Act of 2005, Rule 5 of the Securities Rules of 2007 and the Financial Services Rules of 2008. Futuregrowth has been granted a
Category 1 Global Business License under section 72(6) of the Financial Services Act, by the Financial Services Commission of Mauritius.
Old Mutual African Agricultural Fund (Luxembourg) (“the Fund”) has been incorporated for an unlimited period under the laws of the
Grand Duchy of Luxembourg as a “societe d’investissement a capital variable (SICAV) under the form of a “societe anonyme” on 31
May 2013 organized under Part II of the Law of 2010.
This document is expressly not intended for persons, who due to their nationality or place of residence are not permitted access to such
information under applicable law. Neither this document nor copies thereof may be sent to the United States of America, or any of its
territories or possessions or areas subject to its jurisdiction, or to or for the benefit of a U.S. person. Neither this document nor copies
thereof may be sent to the United Kingdom, or any of its territories or possessions or areas subject to its jurisdiction, or to or for the benefit
of a citizen of the United Kingdom.
More detailed information on the risks and investment strategy can be found in the respectable Preliminary Private Placement
Memorandum and Prospectus
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REGULATORY INFORMATION
Old Mutual Investment Group (Pty) Limited
Physical Address: Mutualpark, Jan Smuts Drive, Pinelands, 7405
Telephone number: +27 21 509 5022
Old Mutual Investment Group (Pty) Limited (Reg No 1993/003023/07) is a licensed financial services provider, FSP 604, approved by the Registrar of
Financial Services Providers (www.fsb.co.za) to provide intermediary services and advice in terms of the Financial Advisory and Intermediary Services
Act 37 of 2002.
Market fluctuations and changes in rates of exchange or taxation may have an effect on the value, price or income of investments. Since the
performance of financial markets fluctuates, an investor may not get back the full amount invested. Past performance is not necessarily a guide to
future investment performance. The investment portfolios may be market-linked or policy based. Investors’ rights and obligations are set out in the
relevant contracts. In respect of pooled, life wrapped products, the underlying assets are owned by Old Mutual Life Assurance Company (South
Africa) Limited who may elect to exercise any votes on these underlying assets independently of Old Mutual Investment Group. In respect of these
products, no fees or charges will be deducted if the policy is terminated within the first 30 days. Returns on these products depend on the
performance of the underlying assets.
Disclosures: Personal trading by staff is restricted to ensure that there is no conflict of interest. All directors and those staff who are likely to have access
to price sensitive and unpublished information in relation to the Old Mutual Group are further restricted in their dealings in Old Mutual shares. All
employees of the Old Mutual Investment Group are remunerated with salaries and standard incentives. Unless disclosed to the client, no commission
or incentives are paid by the Old Mutual Investment Group to any persons other than its representatives. All inter-group transactions are done on an
arms length basis. We outsource investment administration of our local funds to Curo Fund Services (Pty) Ltd, 50% of which is owned by the Old Mutual
Investment Group.
Disclaimer: The contents of this document and, to the extent applicable, the comments by presenters do not constitute advice as defined in FAIS.
Although due care has been taken in compiling this document, Old Mutual Investment Group does not warrant the accuracy of the information
contained herein and therefore does not accept any liability in respect of any loss you may suffer as a result of your reliance thereon. The processes,
policies and business practices described may change from time to time and Old Mutual Investment Group specifically excludes any obligation to
communicate such changes to the recipient of this document.
This document is not an advertisement and it is not intended for general public distribution. The recipient is advised to assess the information with the
assistance of an advisor if necessary, with regard to its compatibility with his/her own circumstances in view of any legal, regulatory, tax and other
implications. The information herein does not constitute an offer to sell or a solicitation of an offer to buy any securities. This document is expressly not
intended for persons who, due to their nationality or place of residence, are not permitted access to such information under applicable law.
Old Mutual Investment Group has comprehensive crime and professional indemnity insurance. For more detail, as well as for information on how to
contact us and on how to access information please visit www.oldmutualinvest.com.
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