Wales-based investment manager Cru is aiming to raise £100m in the UK from a capital-protected retail structured product linked to a venture that promises ethical investment in Malawi’s agricultural sector. The firm expects the product to pay roughly 30% of an overall return of 40-50% over six or seven years.CEO Jon Maguire told SRP the plan will be structured using a zero coupon bond that leaves over 30% of capital to be invested in an Africa Invest fund listed on the Guernsey Stock Exchange. The underlying fund will be available to institutional investors.
The capital will then be used to add 20,000 hectares of land in Malawi to land previously acquired, using Africa Invest to establish a commercial agricultural business to both make a profit and help alleviate poverty.
Africa Invest is currently owned by Cru. Raising the asset this way will divert 70% of its ownership to investors, retaining 10% for staff and 20% for Maguire and his business partner.
Cru wants Africa Invest to become a major exporter of bird’s eye chillies and herbs. Field tests on mint and basil are already in place. The manager said 50% of the 20,000 hectares of land it acquires will be placed under irrigation. Two paprika processing plants will be established to deal with up to 6,000 tonnes of paprika.
“We acquire arable land for less than £250 per hectare. By international standards, this is extremely low. For instance, compared to UK arable land, our land is at a 95% discount. As pressure for farmland grows globally, Malawi farmland prices should rise substantially,” said Cru CEO Jon Maguire.
He added, “Food prices are rising strongly. Arable land is being put to biofuel, reducing supply for food. Population growth, particularly in developing countries, is increasing demand for food. Thus, with supply falling and demand rising, the outlook for higher food prices and increased profits for us, is bright.”
Maguire, the son of a Baptist minister, said the investment’s social aspect is also crucial: "Aid doesn't work," he said. Africa Invest now financially engages with some 80,000 Malawians, a process Maguire said he has seen lift them out of poverty. He added, “We have established a feeding programme at all of our farms, providing nourishing porridge four times a week to 1,450 orphaned and malnourished children, Aids victims and the elderly.”
Cru's structured product is expected to open on 18 February and close on 18 April next year, to allow for Isa investment over two tax years. Minimum investment will be as low as the firm can make it and possibly around £2,000.
Further details of this product will be available on SRP in due course.