Seedling Investments has officially launched a fresh investment initiative offering investors a unique opportunity to support and benefit from the next wave of innovation in New Zealand’s agricultural sector. Designed to accelerate the transition of New Zealand’s dairy sector toward lower emission farming, the Next Gen Agri Fund targets solutions that address critical challenges such as sustainability, rising operational costs, and succession pathways for young farmers.
The fund is targeting a NZ$150 million fund size and at scale, will target 6,000 kW of solar generation, 35,000 tons of soil carbon sequestration and 4.5 million kilograms in milk solids. Seedling Investments has an initial target of 5,000 hectares of dairy and support blocks under management, with the goal of creating New Zealand’s largest Dairy group.
This is the first fund for Seedling Investments, which was founded by Sebastian Chapman and Sean Laidlaw, and will focus on New Zealand dairy. Given that Chapman grew up around dairy and was himself a dairy farmer for nearly half a decade, and that Laidlaw has a finance background with experience in the dairy and agriculture space, the focus on dairy was a natural fit. New Zealand is a top producer of dairy, which also continues to be a significant contributor to the country’s exports. More than 95% of New Zealand’s dairy production is sold to more than 130 countries worldwide and accounted for 24% of the country’s total export values in the year ending in March 2024.
Providing Solutions to Key Challenges Facing New Zealand Agriculture
“We started Seedling to solve two key problems,” Chapman told RFSI News. “One: to solve the succession crisis in farming, and two: to accelerate the transition to regenerative agriculture.”
As in many regions of the world, New Zealand is facing the challenge of an aging farmer population. The average age of a farmer is 58 years, while simultaneously 80% of the nation’s export revenue comes from agriculture. “This puts the country in a huge risk profile for how the future looks for this industry,” explains Chapman. “If trends continue, it’s likely to be all gobbled up by corporates.”
To address this, Seedling developed a unique equity partnership model with farmers. Chapman explains, “In a lot of cases there are retiring farmers looking to exit, but they’re happy to leave some capital in, then you’ll have a young farmer that may have 5% of the capital required. Seedling then plugs the gap and will capitalize until it reached an optimal level.” The equity partnership serves as the basis of the contract, then the young farmers are given first right of refusal on any share sales, along with a mechanism wherein, if the farm is exceeding returns, the farm business can buy back the fund and effectively grow the percentage of the farm’s ownership that belongs to the young farmer. Chapman adds that this also allows the fund to focus on primarily being in assets throughout the value ad period, optimizing capital growth for investors.
“Improving capital pathways and investments are essential for New Zealand to maintain on-farm independence and a sustainable, prosperous food and fiber sector in the future,” said Co-Founder Sean Laidlaw. “We have structured the fund around alignment of incentives, driving Investor returns and growing equity ownership for our farmers.”
Regenerative Transition Strategy
To address the fund’s second goal, it will aim to accelerate the transition of conventional practices to more regenerative dairy farming. “This also gives a scope for a value add for investors,” says Chapman, “as we are targeting what are generally looked over farms when viewed in a conventional sense yet are perfectly poised to respond well to regen practices.”
The fund’s inaugural investment in Waimate, South Canterbury offers an attractive opportunity to invest in a well performing, turnkey operational Dairy farm, with a proven track record and infrastructure. Early focus will be to continue to drive performance while managing the transition to regenerative farming. The location presents some of New Zealand’s most attractive climate for pasture production and dairy farming.
An Opportunity for Wholesale Investors
The Seedling Fund is an opportunity for wholesale investors and targeting a return rate of 9% with annual cash distributions targeted at 5%*. It’s accessible through the Syndex platform, which offers transparency, liquidity, and comprehensive reporting tools, as well as provides investors with a streamlined and informed investment experience. ‘’We’re excited to have Seedling on the Syndex platform and glad to play our role in supporting them in raising capital for such an important initiative. Utilizing Syndex offers investors in Seedling comfort that they will enjoy a superior level of investor relations and some confidence that they will have access to a liquidity solution if their circumstances change over time or they wish to increase their investment.” said Ross Verry, CEO of Syndex.
And this fund is only the beginning for Seedling Investments. “We do have aspirations to provide a service to a full range of ag businesses,” says Chapman. “However we’re starting in dairy as it’s what we know, the markets are strong for the product currently, and it has the most low hanging fruit for making a positive impact.”