Good evening,

goFARM, an agricultural investor founded by a former Warakirri Asset Management executive and backed by the Costa family and Qantas Super, has begun pounding the pavement for a new fund that hopes to pick tomorrow’s winners on its patch.

The turnaround specialist is seeking $300 million equity for its freshly minted Responsible Agriculture Fund, which it would beef up with an equivalent amount in debt from the big four lenders and sector incumbent Rabobank. That should be enough dry powder for founder Liam Lenaghan and his 200-strong team to back up to five ideas.

Lenaghan told Street Talk he sees three areas as red-hot for investment. First, is to follow climate modelling to locate the “food bowls” of the future, which in Victoria should mean a shift from the incumbent Mildura towards the Goulburn Valley.

The second, is a scanning for distressed or stressed assets that have room to be repurposed for crops that provide better productivity. Stressed assets – either from receivership or family dynamics – is where the firm has harvested nearly a third of its 100-plus deals since its founding in 2013. And within it, vineyards are the deal du jour for agri investors.

Last, goFARM sees geography-specific opportunities. In Tasmania, better government backing for irrigation infrastructure has opened the gates to grow higher-value crops at rain-fed farmland while Queensland’s water-rich areas like Burdekin have holdings that can be pivoted from broad-acre crops to higher-value enterprises such as sugarcane for aviation fuel as opposed to just sugar, he said.

All of that should boil down to about 12 to 15 per cent net internal rate of return for RAF’s investors, or 2.5 time to 3 times multiple over the fund’s eight-year term. Of note, the bulk is from capital gains as opposed to income, given goFarm’s playbook is to buy and aggregate unloved assets, with a goal of adding value by making operational changes.

goFarm is in exclusive due diligence to secure its seed asset for the new fund. The Costa family has been a part-owner of the firm since late 2015.

Read the full story tomorrow and more on the Street Talk page.

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Australian shares fell on Friday but rose 0.8 per cent over a week that saw traders lift bets on the Reserve Bank cutting interest rates in 2024.

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