Financial services group TIAA-CREF, which is a major agricultural investor, said on Monday it is partnering with Canadian and European money managers to form a $2 billion global farmland investing company to capitalize on the growing demand for grains and other agricultural products.
U.S.-based TIAA-CREF, which also provides retirement services and has about $487 billion in assets under management, said it and several international institutional investors had $2 billion in commitments to invest in farmland in the United States, Australia and Brazil, all key grain exporters.
A TIAA-CREF affiliate will manage the TIAA-CREF Global Agriculture LLC.
Investors include AP2, one of the largest pension funds in northern Europe with about $32.1 billion under management; British Columbia Investment Management Corporation (bcIMC), an independent investment management company that manages about $91.6 billion; and the Caisse de dépôt et placement du Québec, which manages funds for public and private pension and insurance plans and has about $161 billion in net assets.
Growing demand for protein in developing economies and alternative energy mandates are helping to raise demand for agricultural products used for food, fiber and fuel and driving investment in farmland, said Jose Minaya, managing director and head of global natural resources and infrastructure investments at TIAA-CREF.
"Direct investment in farmland provides access to the key driver of food production," he said.
Farmland prices in several key U.S. farm states are currently at or near record highs amid an agricultural boom.
TIAA-CREF currently manages about $2.5 billion in more than 400 properties totaling 600,000 acres of farmland in the United States, Australia, South America and Eastern Europe.
"We believe farmland offers investors excellent portfolio diversification given its low correlation to traditional asset classes like stocks and bonds," Minaya said.
For Quebec's Caisse, the deal marks its entry into farmland investing.
"Farmland presents a risk-return profile that meets our depositors' objectives and that offers portfolio diversification," said Normand Provost, Caisse executive vice president, private equity.