The global commodity boom is driving prices for agricultural assets to near bubble levels and the best opportunities may be found in related investments, the head of one of Canada’s biggest pension funds warned.
“I must get an agricultural play in my inbox once a day or once every couple of days and that’s usually indicative that maybe you should be very, very selective,” Alberta Investment Management Corp. (AIMCo) chief executive Leo de Bever told Reuters.
“The agricultural play has mainly got to the bubble stage, where people are paying more than what the assets are worth.”
AimCo, which manages close to $70 billion in assets for over 300,000 public-sector employees, has exposure to the sector mainly through timber and grains.
In January it announced the $415-million, joint acquisition of Australian timber lands with New Forests Pty Ltd.
It has also made major investments in recent years in Viterra, Canada’s biggest grain handler, and Precision Drilling Corp., the country’s largest oil and gas well-drilling company.
De Bever, who got his start in commodities investing while still at the Ontario Teachers’ Pension Plan in the 1990s, said AimCo was looking at opportunities in the infrastructure that supports agriculture.
Particularly in Latin America, De Bever pointed at opportunities to invest in the supply chain that helps farmers get their product to domestic and foreign markets.
“We’re working with some local groups,” he said. “There’s a lot going on there.”
AimCo is also keeping a close eye on alternative energy markets. It already invests in Bloom Energy, which produces electricity from natural gas.
De Bever said the sector could see greater growth if ways are found to store the energy from alternative sources like solar and wind power.
“Wind doesn’t blow all the time, but if you can store it, who cares? And the same goes for the sun,” he said. “We are looking for opportunities anywhere. We may pass up on 10 or 15 before we have one that makes sense.”
LEO DE BEVER