An innovative successor fund investing in resilient agri-food excellence in Italy will be presented by Amundi to family investors at the Campden Wealth Family Office and Investment Forum in Geneva on 6-7 October, 2021.
Amundi SGR, the third largest asset manager in Italy, with about €200 billion ($234 billion) of assets under management, launched this year the closed-ended fund under Italian law Amundi Eltif AgrItaly PIR, to invest through an ELTIF vehicle, compliant with the PIR regulation.
The financing structure has already been tested on iconic Italian agri-foods such as Parma and San Daniele ham, as well as Parmesan cheese, through the first generation fund AIF Agritaly. Now Amundi has adapted it to embrace Italian PDO wines as well, with the launch of the successor fund, Amundi ELTIF Agritaly PIR Fund.
Amundi said the €7 billion ($8.2 billion) Italian market for these products has proved resilient in the first half of 2020, despite the impacts of the Covid-19 pandemic. However, these products take time to mature and inventory finance from local banks has been harder to obtain.
The current market context combined with the high leverage of the industry, make it difficult to get more funds from traditional source of financing, hence growth was capped, Amundi said.
Before his presentation at the Swiss forum, Pierre-Henri Carles, Head of Real Assets at Amundi SGR, told CampdenFB the new fund will invest mostly in bonds and opportunistically in other quasi equity instruments, with medium and long-term horizons to provide flexibility to producers in implementing the growth strategy.
What message do you want to send to family investors in-person at the Family Office and Investment Forum?
The real economy is becoming a popular theme among the alternatives, like ESG or green bonds, although there is a lot of greenwashing, so we thought that the simpler the fund, the better, to catch a larger audience. That’s why we launched Amundi Eltif Agritaly PIR, which is a genuine fund to provide family-owned businesses with alternative financing through the monetisation of their inventory.
Why has Amundi Italy SGR launched the Agritaly fund?
We launched the successor fund in 2021 and one of the reasons was that we launched the first-generation fund back in 2017, which focussed on food products, particularly cheese and ham. We happily noticed during the Covid-19 crisis that those products were very resilient because people like to keep consuming those products. The food sector has been resilient, and wine and food producers are looking for financing in the medium to long-term to invest and keep their businesses growing.
We decided it was the right timing to launch this second-generation fund with a big focus on PDO Italian wines, as this industry is really in need for new ways of financing its growth in terms of investments. Our investment model was quite interesting and appealing to the PDO wine producers in Italy.
While the fund offers strong guarantees for at least 70% of the target investments (the inventory is 100% pledged), investors could expect a recurring dividend stream in the region of 5% in the medium term horizon (about six years) in a defensive industry, which is quite appealing in a low interest rates' environment.
Most of the producers are family-owned businesses. We invest in products with a Protected Designation of Origin (PDO) , so this makes for more reliable products, which are protected at the EU level. What is important is that 100% of the inventory is pledged, meaning we have real guarantees, as we own the wine bottles or other products that we invest in. These are true protections for investors.
The first initiative was focused on Italy because it is one of the first countries when it comes to iconic agri-products with PDOs, but with producers struggling to find inventory financing from local banks. Again, this is important for us, because it means we do invest in products which are protected at the EU level.
Amundi Eltif Agritaly PIR is a straightforward asset-backed financial product allowing investors to have access to local producers mostly in the Italian wine industry. It has interesting downside protection with the pledge on all the inventory while providing a clear medium to long-term financing to local producers looking to expand their businesses. You get access to an inventory of agri-products or one product. You really get a sense of what is the real economy, you help local producers and finance the growth of entrepreneurs.
Amundi Eltif Agritaly PIR will be used as a pilot for a potential future wider EU strategy. Indeed, the fund can invest around 30% outside Italy. We are currently looking at Spain which is a similar food market to Italy.
We did the first fundraising in low-end retail in Italy in April this year and we had the first closing at about €70 million ($82 million)—we will raise money up to €200 million. We are in the process of investing this money. About 30% has been invested, mostly in PDO wines in Italy.
Going forward, we would like to raise additional money to cope with demand. We would do another fundraising around the beginning of next year for family office investors who have a portfolio of investments and are interested in a fund that has stable predictable performances and is paying regular dividends.
We know we are not going above the hard cap of €200 million ($234 million), so €150 million ($176 million) of fund raising could be a nice target for H1 2022.
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