New farmland investment opportunity set to raise up to GBP20 million
Brooks Macdonald Funds (BMF) has launched UK Farming plc, a new asset backed UK farming business which is expected to qualify for Business Property Relief (BPR). BMF also announces the appointment of Christine Tacon as Chairman of the new business.
Tacon was Managing Director of The Co-operative Farms Limited from 2000 to December 2011 and was an executive board member of Co-operative Food Retail. She brings a wealth of experience in the farming industry to UK Farming plc.
UK Farming plc, which is seeking an initial raise of up to GBP20 million, is an unquoted public limited company targeting investment in existing arable farms. The land will be farmed by established contractors for the company for the production of cereal crops, taking advantage of their demand for both food and, potentially, bio-fuel production. Once established, the company is expected to qualify for BPR, which may enable UK tax paying investors to shelter their investment from Inheritance Tax.
Savills predicts a 36 per cent increase in the average value of farmland in the five years from 2012. This forecast growth follows a substantial rise in average farmland values over the past five years (138 per cent) which was significantly greater than that recorded for either residential or commercial property or equities.
Simon Wombwell, CEO of Brooks Macdonald Funds, says: “Our UK Farming plc is a unique opportunity to take advantage of the strong fundamentals and outlook for farmland investment combined with a shelter from Inheritance Tax. We have promoted in the agricultural sector for some time and are pleased to offer an attractive route for investors to access this investment class.”
Tacon says: “We are delighted to be offering this new farmland investment vehicle, giving investors exposure to the strong qualities possessed by this exciting asset class. Farming is an industry attracting increasing interest and, though subject to many external market forces, one that with sound commercial management can prove a sustainable long term investment.”
The growth in UK farming profits and land values in recent years has been driven by a number of factors, all of which the directors of UK Farming plc believe are likely to be sustainable in the long-term:
Global population has been predicted by the FAO in its report “Feeding the world in 2050” to grow to 9.1 billion by 2050, an increase of 34 per cent against the estimated global population in 2009, which they have predicted will result in food consumption more than doubling during the same period;
Increasing affluence and changing patterns of consumption are leading to rising per capita demand for food;
Farmers expanding their holdings to benefit from rising commodity prices and to achieve economies of scale;
Interest from the investment community in bare land (farmland not including houses) as an alternative asset class;
A low proportion of the UK’s agricultural land is put up for sale each year; and
Potential demand for bio-ethanol and bio-diesel – both made using cereal crop products.
UK Farming plc has engaged Chesterton Humberts to seek land to acquire. Once acquired, the land will be farmed by the Company to produce, predominantly, cereal crops, with the land and buildings being valued on a quarterly basis by Savills.
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