This presentation by SLM Partners' Paul McMahon was given at a session titled "Securing Private Investment in Land Regeneration" at the Global Landscapes Forum: The Investment Case on June 10, 2015. For more, please visit http://www.landscapes.org/london/

1. STRICTLY PRIVATE & CONFIDENTIAL
Securing private investment in
land regeneration
Paul McMahon
Managing Partner, SLM Partners LLP
10 June 2015

2. SLM Partners is an asset manager that focuses on
sustainable land use
2
 Strategy is to scale up regenerative, ecological agricultural and forestry
systems that deliver financial returns and environmental benefits
 Investment professionals in London and New York, working with farmers and
foesters on the ground
 First fund, the SLM Australia Livestock Fund, has raised AU$105 million
(US$80 million) in equity and debt
 Launching new projects in Chile (sheep production) and Ireland (forestry), and
exploring opportunities in USA and Spain
 Target investors are pension funds, insurance companies and family offices

3. Date Creek, Arizona Downstream, same day, different management
Next door, same day, different managementSonoran Desert, Mexico
Near Victoria Falls, Zimbabwe Next door, same day, different management
In Australia, we use ‘holistic planned grazing’ or ‘mob
grazing’ to restore grasslands
3
 Put animals in
large herds
 Divide land
into many
smaller
paddocks
 Improve
stockwater
facilities
 Move animals
according to
adaptive plan
 Use impact +
rest to restore
grassland

4. The SLM Australia Livestock Fund is up and running
4
 10-year, closed-end private equity fund
 First closing in June 2012 with Danish pension fund as anchor investor
 Rabobank is providing up to AU$30 million in debt
 Strategy is to acquire and operate land for beef cattle production, implementing
holistic planned grazing
 480,000 hectares (1.1 million acres) of land acquired so far
 8,000 cattle in the herd, with plans to reach 30,000 to 40,000 in 5 years
 Target net Internal Rate of Return is 12% after all fees and taxes

5. 7 managements units in Queensland and New South Wales
5
Name:Cunnamulla
Charleville
District:
Size (ha):
Price:
Padua
Cunnamulla
43,174
$10.0m
Name:
District:
Size (ha:
Price:
Listowel Downs
Blackall
25,523
$11.2m
Name:
District:
Size (ha):
Price:
Colac
Quilpie
165,182
$6.4m
Name:
District:
Size (ha):
Price:
Garrawin
Eulo
79,312
$4.3m
Name:
District:
Size (ha):
Price:
Amenda
Cunnamulla
43,773
$11.8m
Name:
District:
Size (ha):
Price:
Willacora
Cunnamulla
49,120
$9.3m
Name:
District:
Size (ha):
Price:
Eureka
Enngonia
71,131
$7.4m

6. Australia allows scale – big herds in big country
6

7. Positive impacts were visible after the first year
7
Neighbouring property “Noorama” under
conventional management, 23 Mar 2014
SLM property “Padua Park” under holistic grazing, 23 Mar 2014
More animal grazing
days were taken from
the Padua Park side
than Noorama

8. 8
We are launching a new project in Chilean Patagonia
 70% of grasslands of Patagonia suffer
from degradation
 Holistic planned grazing can restore
grasslands, while improving productivity
 Our operational partner has worked
with 30+ sheep farmers in Chile and
Falkland Islands
 Strategy is to acquire grazing
properties in southern Chile and
introduce better grazing management
 Revenues will come from sheepmeat
(60%) and wool (40%)
 Initial size of opportunity is US$100m

9. 9
There is an opportunity to harness investor interest in land
 Global assets under management
reached $64 trillion in 2013
 ‘Alternatives’ accounted for $7.2 trillion
 Within Alternatives, $2.4 trillion was
invested in ‘Real Assets’
 Forestry is a well-established asset
class for institutional investors
 Agriculture is now emerging as an ‘asset
class’ for investors – an estimated
$45bn is invested in farmland
 How can we channel some of this long-
term capital towards land regeneration?
Source: McKinsey, HighQuest
WSIB approves $300m commitment to Teays River
MainePERS in $200m agri investment
SWF investment in agri grows to $11bn
Black River attracts nearly $1.3bn to food & agri funds
AP2 invests $750m in TIAA-CREF II

10. What we have learnt about attracting private investment
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1. It is only a concept on paper without great local managers – real
farmers and foresters
2. Geography is a big determinant of risk-reward requirements
3. Investors want to know what they are investing in – too many layers
and too much complexity can scare them off
4. It is hard to match investors’ desire for scale with the ‘natural’ size of
many land regeneration activities
5. Commodity returns should be front and centre – future environmental
payments are icing on top