The agriculture sector that is still underserved as banks are unable to provide the specialist understanding, flexibility and speed to meet farmer needs.
FarmCap, a specialist non-bank lender, has announced the launch of a private credit agricultural mortgage fund. The fund aims to fill a funding gap in the market, helping Australian farmers access finance in a sector poorly served by traditional banks.
“The FarmCap Private Credit Agricultural Fund will provide investors with access to a diversified portfolio of agricultural mortgage-backed loans,” said Jonathan Weinstock, Founder and Managing Director of FarmCap.
Whilst the Australian Banking Association states that lending to Australian agriculture businesses rose by $40bn in 2024, it is a sector that is still underserved as banks are unable to provide the specialist understanding, flexibility and speed to meet farmer needs.
“Banks are often unable to fund future growth, expansion opportunities or short-term working capital requirements,” said Jonathan. “Particularly opportunities less than $2m remain underserved – last year, we saw more than 450 requests for support totalling more than $500m which suggests there is a significant gap for farmers.”
“We believe this is a unique opportunity for investors gain exposure to private credit in their portfolio, backed by an incredibly strong and resilient asset class by way of Australian agricultural land.”
The FarmCap Private Credit Agricultural Mortgage Fund offers both a diversified fund and a contributory direct option to wholesale investors. The diversified fund targets returns of 9.5%-11.5% p.a, and the contributory fund 10-12% to 13-16%, with distributions paid to investors quarterly.
The positions in the funds range from $200k to $15m, with loan tenure from 6-24 months. The investment mandate has a clear target portfolio for type of farm exposure, across broadacre, livestock, irrigated cropping, horticulture, dairy and other.
“Where FarmCap is different to other lenders is that we are specifically focused on secured, land-only mortgages. Other credit providers may take more risk-laden security against stock, machinery and other assets, however our focus is on capital preservation backed by real property, to provide investors with attractive risk-adjusted returns.”
The FarmCap team has already delivered more than 40+ successful transactions across Australia on a syndicated investment basis, with the fund now open to accepting new investors.
“In an environment of investment volatility, Australian agricultural land remains a steady asset class that has outperformed in periods of uncertainty, and has attracted some of the world’s leading institutional investors. We are now making this asset class available to a broader audience.”