INVESTING IN INNOVATION IN THE AGRICULTURAL SECTOR THROUGH A PRIVATE EQUITY FUND

Thursday, 14 March 2019

INVESTING IN INNOVATION IN THE AGRICULTURAL SECTOR THROUGH A PRIVATE EQUITY FUND


Pairstech Capital Management has started collecting a new private equity product that will invest in companies active in agritech and agribusiness


Pairstech Capital Management LLP was founded in 2007 by Enrico Danieletto. Pairstech Capital is based in London and is a fully independent entity owned by its shareholders.
The company is authorised and regulated by the Financial Conduct Authority.

The investment objective is to achieve an absolute return, through a full range of financial instruments, with onshore and offshore funds and managed individual accounts. Pairstech offers expertise in a wide range of asset classes and provides institutional and private investors with a set of products that represent true diversification with the best risk/return profile available. The company supports partners by offering them the expertise related to a wide range of authorizations, allowing them to implement their operational and commercial strategies within a fully regulated reality.
The agricultural sector, for years neglected by great technological innovations, represents an attractive investment opportunity in light of the steps that technology is taking. Enrico Danieletto, CEO of Pairstech Capital Management, tells MondoInvestor about the birth of the Agritech Fund.
First of all, what is meant by agri-tech and agribusiness?
For agritech and agribusiness we mean the environment in which high-tech companies operate in the agricultural sector. For example, we can talk about technologies that monitor production through drones or satellites, both on the hardware and software side, product tracking companies through the chain to the final consumer, activities of cultivation in hydroponic greenhouses instead of traditional greenhouses, bio fertilizers and bio stimulants, etc..
Why did you decide to focus on these sectors?
The agricultural sector has been neglected for many years by the great innovation that, since the 80s and 90s, has reshaped the rest of the economic activity, if we exclude the genetic modification of certain types of crops, which is also very opposed by public opinion. Even now, much of the innovation is linked to traditional mechanics and great chemistry.
Which types of investments will the fund make and in which areas?
The product is a private equity fund, so it will invest mainly in shares of private companies, even if we do not exclude forms of financing to companies that are part of or intermediate financial instruments between the two areas. Geographically, we will start from the western world, where the development and use of technology is more advanced, but we expect to be exposed also to emerging countries, where the improvement in the profitability of agricultural production can be double-digit.
When selecting investments, you will pay attention to ESG factors? Certainly ESG criteria are now a fact of every investment policy and even more important and indispensable in this sector.
When will you start investing? The fund is in the collection phase, but we have already selected some investments.
In short, what are the fund's cost and liquidity characteristics and for which investors is it suitable?
The fund has low costs when compared to traditional private equity funds, in line with a general reduction in costs for the whole industry, equal to 2% of management fee. Particularly interesting is the fund's remuneration for investors, who can choose between return shares, with a return of 5% per annum with liquidity on 18-month windows, and pure private equity shares, where no perfor-mance fee is charged. The former are suitable for those investors who want to have exposure to the sector but need a return and liquidity much greater than that of the private equity fund, the latter instead for those who believe in long-term growth. A very interesting aspect is that the fund also provides a subscription structure to contribution, thus making "financialized" an otherwise only real asset and not liquid at all, as usually happens in the industry. What are the targets of the fund? As we said, class B shares have a return of at least 5% per year, class A shares point instead to a high double digit, obviously with a much longer period of investment.