CoBank, a cooperative bank that is part of the Farm Credit System, is backing the project and has already donated $10 billion. The fund is the Rural Infrastructure Opportunity Fund and will be managed by the investment firm Capitol Peak Asset Management. The USDA will be responsible for finding projects for it.
Limited high-return investment opportunities and low interest rates have caused pension funds and institutional investors to look for alternative investment opportunities. This, coupled with the rural communities’ high demand for capital, caused Tom Vilsack, U.S. agriculture secretary, to seek out the help of former PepsiCo executive Matthew McKenna.
Together, they formulated this plan to encourage Wall Street and large institutional investors to invest in rural America. Through this fund, investors will have the opportunity to make both debt and equity investments not only on individual projects, but on bundled projects as well, and will receive returns on their principal investment with interest.
After the 2008 financial crisis, some Wall Street investors have been looking for opportunities to invest in America’s farmland on both a large pension fund and an individual level. This movement has grown to the point that conferences that previously only had attendees from the agriculture industry are now being flooded with venture capitalists and hedge fund managers. California, which is in one of its most severe droughts on record, could particularly benefit from this program since people there are willing to pay for water, creating a major business opportunity for investors.
Nearly 600 financial executives, investors and government officials were present when Vilsack announced this plan during the White House’s Rural Opportunity Investment Conference in Washington. Treasury Secretary Jacob J. Lew and Ken Wilson, the vice chairman of BlackRock, the world’s largest asset manager, spoke at the event. FG
—Summarized by Progressive Forage Grower staff from cited source
