U.S. Fund Joins Brazil Asset Manager in Agricultural Foray
(Bloomberg) -- A leading U.S. agribusiness investor has teamed up with a fast-growing Brazilian asset manager to modernize finance in one of the world’s biggest farming powerhouses.
The Brazilian unit of NCH Capital Inc., a New York-based firm with $3 billion under management, has merged with EQI Asset. The deal gives NCH access to a large and growing pool of investors in Brazil to raise cash for farming funds, while EQI will benefit from NCH’s advances in artificial intelligence for portfolio management. EQI’s assets under management will reach nearly 1.5 billion reais ($290 million) with the deal.
“We are one of the main players in terms of agricultural asset management and we’re excited to partner with EQI,” said James Gulbrandsen, NCH’s chief investment officer for Latin America, in an interview with Bloomberg. “It’s shocking how agriculture fund investing in Brazil is nascent, and quant fund investing in Brazil is nascent.”
The deal signals the potential for agriculture-focused firms to deploy technology and financial strategies already dominant in the U.S. into Latin America’s largest economy and shows the opportunities available in one of the world’s top crop exporters. Brazil’s crops are used in everything from Starbucks coffee to Coca-Cola and the nation is the top shipper for sugar, soybeans and arabica coffee beans, while ranking second behind the U.S. for corn.
NCH is one of the world’s 10 biggest investors in agriculture-related asset management and has more than a third of its assets dedicated to agribusiness, according to Gulbrandsen. For 15 years, NCH has raised capital to securitize harvests and to buy farmland and lease it back to growers at market rates, mainly in Russia and Eastern Europe.
NCH Brasil was one of the first to announce an agriculture fund known as a Fiagro in August. Brazilian asset managers have been waiting for years to offer the agriculture-specific funds to retail investors in a country where farming is dominant in the economy. It gives farmers a new option to raise cash at a time extreme weather events have devastated crops and contributed to global food inflation.
“We are excited to be a pioneer in this market with EQI,” Gulbrandsen said.
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