Susan Payne, a red-haired British woman, is the CEO of the largest land fund in southern Africa, which currently includes 150,000 hectares (370,000 acres), mainly in South Africa, Zambia and Mozambique. Payne hopes to raise half a billion euros from investors. She talks about fighting hunger, but the headings on her PowerPoint slides, embellished with photos of soybean fields at sunset, tell a different story. One such heading refers to "Africa -- the last frontier for finding alpha." The word alpha signifies an investment for which the return is greater than the risk. Africa is alpha country.
That's because land, which is extremely fertile in some regions, is inexpensive on the impoverished continent. Payne's land fund pays $350-500 per hectare ($140-200 per acre) in Zambia, about a tenth the price of land in Argentina or the United States. For a small farmer in Africa, the average yield per hectare has remained unchanged in 40 years. With a little fertilizer and additional irrigation, yields could quadruple -- and so could profits.
These are perfect conditions for investors. Susan Payne sees it that way, and so do her investors. In fact, there has been so much demand for this type of investment that Payne recently had to establish a new sub-fund.
A great deal of capital is currently available. It is the second year of the global economic crisis, and investors are seeking sound and safe investments, which is why the audience in New York includes not only hedge fund managers and agriculture industry executives, but also the representatives of large pension funds and the chief financial officers of five universities, including Harvard.
Thousands of investment funds, from small to large, have recently begun applying the most basic formula in the world: Man must eat.
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