PGIM, a subsidiary of the giant US insurer and fund manager Prudential, has entered the Australian agricultural lending market for the first time via a funding deal for Foundation Agri Finance.
Via the PGIM Real Estate division, the fund manager is hoping to grow an Australian loan book to $1 billion dollars in the next five years.
The firm believes that the dominance of big banks, which typically provide short-term, floating rate loans, could be disrupted by offering 10-to-15-year long-term, fixed rate finance.
Rachelle Schlesinger, head of agriculture finance, PGIM Real Estate, said the firm saw significant demand for long-term, predictable financing solutions that had been the hallmark of their US lending market and would use their existing Australian commercial real estate office to facilitate the new business.
"We have big ambitions for the Australian market as we grow our agricultural financing platform’s international presence,” she said.
PGIM Real Estate has been active in agricultural lending, mainly focussed on the US, for 120 years and had grown assets under management from $US4bn to $US10.8bn over the last decade. PGIM is the fund management arm of Prudential which has $US1.4 trillion under management and offices in 18 countries.
Rachelle Schlesinger, head of agriculture finance, PGIM Real Estate with David Haydon, founder and executive director, Foundation Agri Finance.
Foundation Agri Finance, the recipient of the PGIM funding, was founded in July last year by former Rabobank executive David Haydon and former MLC chief investment officer Natalie Meyenn.
David Haydon, founder and executive director, Foundation Agri Finance, said, “Lending to Australian agriculture businesses has become increasingly short-term and less about the customer. We want to reverse this trend and offer long-term financing solutions that are built around the needs and goals of each customer.”
According to ABARES the total value of farm sector debt was $115.7 billion at the end of the 2023 financial year.