TIAA-CREF Announces $2 Billion Global Agriculture Company
TIAA-CREF, a leading financial services provider, today announced the close of TIAA-CREF Global Agriculture LLC. The new company comprises several international institutional investors and has $2 billion in commitments to invest in farmland in the United States, Australia and Brazil.
The company began investing capital in April 2011 and includes AP2, British Columbia Investment Management Corporation (bcIMC), the Caisse de dépôt et placement du Québec (Caisse) and other like-minded institutions. TIAA has a significant stake in the company, and an affiliate of TIAA, Teachers Advisors, Inc., serves as the manager.
“We see increased protein consumption in developing economies and alternative energy mandates driving increased demand for food, fiber and fuel from a limited resource – land. Direct investment in farmland provides access to the key driver of food production,” said Jose Minaya, managing director and head of global natural resources and infrastructure investments at TIAA-CREF. “In addition, we believe sustainable land management is imperative to help create value over the long term, and we employ best practices across our portfolio accordingly.”
Today’s announcement underscores TIAA-CREF’s expertise in global agricultural investment management. The company manages approximately $2.5 billion in high-quality farmland – more than 400 properties totaling 600,000 acres – in major grain-producing regions, including the United States, Australia, South America and Eastern Europe. These investments include capital previously deployed by TIAA-CREF. In addition, TIAA-CREF partners with local farmers and operators to manage and farm the properties, typically by leasing the land to farmers.
“We believe farmland offers investors excellent portfolio diversification given its low correlation to traditional asset classes like stocks and bonds,” Minaya said. “Farmland also acts as hedge against inflation within a portfolio.”
Institutional investors own just 1 percent of farmland1 due to historically high barriers to entry such as low liquidity, limited reporting and research and a large number of off-market transactions. “TIAA-CREF offers investors access to this important, emerging asset class through a sustainable, transparent platform. Importantly, TIAA-CREF’s interests are aligned with ours,” said Anders Stromblad, head of external managers, AP2.
“Investments in agriculture are strategically important in today’s global economy,” said Doug Pearce, chief executive officer / chief investment officer, bcIMC. “bcIMC is pleased with this opportunity to expand our global portfolio and deploy capital over the long term in partnership with like-minded investors such as TIAA-CREF, AP2 and the Caisse.” 1 “Investing in U.S. Cropland.” AEW Research. Sept. 2011:
“This investment marks the Caisse’s entry into an emerging asset class, which will facilitate its exposure to the global demand for agricultural products. Farmland presents a risk-return profile that meets our depositors’ objectives and that offers portfolio diversification,” said Normand Provost, Executive Vice-President, Private Equity at the Caisse. “The group of investors, which includes the Caisse, shares the same long-term vision and the platform of the partners, with TIAA-CREF, aims to be sustainable, accountable and collaborative. By joining forces with TIAA-CREF, we can count on a quality partner with whom our interests are fully aligned.”
TIAA-CREF is a founding member of the Principles for Responsible Investment in Farmland, a group of international institutional investors that launched farmland principles in September 2011. These principles aim to improve sustainability, transparency and accountability of investments in farmland2. TIAA-CREF is also a signatory to the U.N. Principles for Responsible Investment.
TIAA-CREF (www.tiaa-cref.org) is a national financial services organization with $487 billion in assets under management (as of 3/31/12) and is the leading provider of retirement services in the academic, research, medical and cultural fields.
TIAA-CREF Asset Management provides investment advice and portfolio management services to the TIAA-CREF group of companies through the following entities: Teachers Advisors, Inc., TIAA-CREF Investment Management, LLC, and Teachers Insurance and Annuity Association® (TIAA®). Teachers Advisors, Inc., is a registered investment advisor and wholly owned subsidiary of Teachers Insurance and Annuity Association (TIAA).
AP2, the Second AP Fund, is one of the largest pension funds in northern Europe, with SEK 216.6 billion ($32.1 billion) under management across asset classes and the world. AP2 seeks to maximize the long-term return on Swedish pension assets.
bcIMC is an independent investment management corporation that manages a globally diversified investment portfolio of C$91.1 billion ($91.6 billion) as of December 31, 2011. bcIMC is committed to incorporating environmental, social and governance considerations into investment processes as a way to improve long-term returns to clients and beneficiaries. Based in Victoria, British Columbia, Canada, bcIMC invests in all major asset classes including infrastructure and other strategic investments. bcIMC’s clients include public sector pension plans, public trusts, and insurance funds. For more information: www.bcimc.com.
About Caisse de dépôt et placement du Québec
Caisse de dépôt et placement du Québec is a financial institution that manages funds primarily for public and private pension and insurance plans. As at December 31, 2011, it held C$159.0 billion ($160.8 billion) in net assets. As one of Canada’s leading institutional fund managers, the Caisse invests in major financial markets, private equity and real estate. For more information: www.cdpq.com.
2 More information on the principles can be found at www.unpri.org/commodities.
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