announced yesterday that it has expanded its agriculture financing platform into Australia, the first time PGIM has pushed this business beyond North America.
The firm will provide fixed rate, long-term financing solutions to Australian farm operators and agribusinesses. The offering works through an exclusive partnership with specialist agricultural debt provider Foundation Agri Finance. It closed its first transaction at the end of last year, providing a loan to a diversified horticultural business.
PGIM is targeting an Australian agriculture sector which in production terms is forecast to rise by 6 per cent to A$85 billion ($55.8 billion) in 2024 to 2025, the firm said. (PGIM is the global asset management business of Prudential Financial.)
“The market for financing farming operations is dominated by Australian banks that typically provide short-term, floating rate loans. PGIM Real Estate sees an opportunity to provide an alternative with 10 to 15-year long-term, fixed rate financing solutions,” it said in a statement.
With food security being a global issue because of pandemic disruptions to supply chains, conflict in the Red Sea – a major shipping route – and Ukraine – a major wheat exporter – agriculture is gaining more investment and wealth management exposure. This news service has examined the sector here and here, for example.
“We have big ambitions for the Australian market as we grow our agricultural financing platform’s international presence. We aim to offer competitive financing solutions to leading farmers and agribusiness across Australia and grow our Australian loan book to over $1 billion over the next five years,” Rachelle Schlesinger (pictured below), head of agriculture finance, PGIM Real Estate, said. “We chose to expand into the Australian market because we see significant demand from borrowers for the kinds of long-term, predictable financing solutions that we have built our reputation on in the US. Importantly, our operational infrastructure is already in place given our existing commercial real estate business in Australia.”
PGIM Real Estate has been active in agricultural lending for 120 years with a business focused on the US. It is part of PGIM Real Estate’s agricultural investment platform. Assets under management have grown from $4 billion 10 years ago to $10.8 billion today.