Nick Waters, former investment director with Blue Sky Alternative Investments’ real assets team, has established a fund manager focused on water, agriculture and food investments, with Pinnacle Investment Partners taking a minority stake.
The new firm, Riparian Capital Partners, was established this year by Waters, who has since been joined by Patrick Hayden, former director of Blue Sky’s US subsidiary. The pair will both act as managing partners of the new company.
The four-strong RCP team also includes associate partners Matthew Houlahan and Brent Loeskow, both of whom previously worked as investment associates in Blue Sky’s real assets team. All four hold equity stakes in the new business.
RCP is being supported by Pinnacle Investment Management. RCP declined to disclose the size of Pinnacle’s stake other than to say it was in line with other investments Pinnacle has made in fund managers.
Pinnacle holds stakes of between 23.5 percent and 44 percent in the companies it invests in, which it calls affiliates. RCP becomes the 13th affiliate in Pinnacle’s stable and the first to have a focus on agriculture.
Riparian Capital Partners is preparing to launch its first investment product, the Water, Agriculture and Food Fund, in June 2019, Agri Investor can reveal.
On the fund manager’s strategy, Waters told Agri Investor: “We’re seeking to provide domestic and offshore institutional investors with access to investments across the Australian agricultural sector through a mix of commingled funds and tailored portfolios.”
Waters declined to disclose fundraising targets or timescales for WAFF, or what structure the fund will have, but said discussions were ongoing to finalise details.
The structure of RCP, with Pinnacle holding a minority stake, ensured “very strong governance and alignment of outcomes,” Waters added.
“The Pinnacle model is well established and has been tested over a number of years, and has proven very successful across a range of different managers and asset classes. We think it provides the right mix of independence and support that will be attractive to the investment community,” he said.
RCP will focus on investments in the Australian agricultural sector, but Waters did not rule out making offshore investments at some point in the future.
“We aspire to be a market-leading manager of water, ag and food investments with the support of our equity partners, Pinnacle, to the benefit of primarily institutional investors who are seeking exposure to the agricultural sector,” he said.
On the types of assets RCP would likely target, Waters said: “We continue to see compelling investment opportunities in Australian agriculture.
“We will be very selective on where we participate in water markets but believe there is value in a range of entitlements across mature markets within the Murray-Darling Basin and considerable opportunities to invest in certain regions outside the basin.”
‘A lot of hard work to do’
Waters said the firm did not have any mandates or investors on board yet. The response from the market was “very encouraging, but there is a lot of hard work to do yet.”
Riparian Capital Partners will be headquartered in Brisbane and maintain a permanent New York office where Hayden will be based, as he was when working for Blue Sky.
Hayden will lead RCP’s capital raising efforts across the globe, with support from the team in Brisbane and from Pinnacle. He will also chair RCP’s risk committee as it seeks to put in place a strong focus on risk and compliance.
Waters will manage day-to-day operations in Australia and oversee investments in agricultural and water assets, with support from Houlahan and Loeskow.
Waters and Houlahan left Blue Sky in December 2018. Hayden’s departure from Blue Sky has not previously been announced.
The RCP name refers to the riparian zone, an area of land adjoining a body of water, usually a river.
“This is where we’ll seek to make a lot of our agricultural investments, alongside water portfolios – irrigated agriculture effectively lives in the riparian zone,” Waters added.
In a statement, Pinnacle managing director Ian Macoun said: “We are really excited to be launching this new affiliate, which represents our first investment into the agriculture sector.
“We see very strong structural tailwinds to agricultural assets including water and believe the RCP team are well-positioned to provide a range of institutional investors access to this growing asset class.”
Pinnacle’s other affiliates include infrastructure specialist Palisade Investment Partners, which owns Regional Livestock Exchanges, a network of cattle and sheep exchanges in Australia. Pinnacle holds a 36 percent stake in Palisade.
Its stable of investment affiliates together account for more than A$50 billion ($35.6 billion; €31.7 billion) of assets under management.