West Australian managed investment scheme (MIS) company TFS Corporation is looking at replacing funds raised through MIS schemes with funds from longer-term institutional investors.
TFS recently signed a joint venture agreement with Emirates Investment Group to establish Beyond Carbon Trust to give overseas institutional investors the opportunity to purchase sandalwood plantations managed by TFS.
Beyond Carbon has received applications for 350 hectares of Indian sandalwood plantations, amounting to an investment of $35 million.
"At the start of the financial year we made conscious decisions to broaden our funding base away from MIS. The offshore investment in sandalwood plantations managed by TFS is a result of this and is another step in the ongoing transformation of our business model," TFS executive chairman Frank Wilson said.
"What has surprised the management is how quickly the joint venture agreement has shifted our funding model and going forward we expect plantations to be funded by both MIS and non-MIS investment with non-MIS investment playing an increasingly important role."
Australian institutional investors are not yet able to invest in Beyond Carbon, but TFS chief financial officer Quentin Megson said although TFS had not pursued that avenue of funding as yet, it would not be difficult to look at the structuring possibilities.
Frontier Investment Consulting senior consultant Allison Hill said the longevity of agribusiness investments would match well with the long-term investment strategies of superannuation funds.
"This is a suitable long-term investment as super funds are able to invest through the cycles. We have a few clients that are investing in forestry and other agriculture investments," Hill said.
However, she said managers needed to analyse the potential risks of agricultural investments.
"Managers need to look at each investment to ensure that there is an appropriate level of risk. Potential risks include climate change, disease and fire," she said.
