GLOBAL - The Second Swedish National Pension Fund (AP2) has established a joint venture with US institutional investor TIAA-CREF to invest in agricultural real estate in the US, Australia and Brazil.
The deal will see AP2 invest approximately $250m (€177m) in a newly formed company that will acquire and manage agricultural assets, initially focusing on grain production.
Retirement provider and asset manager TIAA-CREF will be the majority shareholder and administrator.
The news comes several months after AP2's chief investment officer Hans Fahlin revealed that the pension fund had made a new allocation to global agricultural real estate as it sought to diversify its total investment portfolio.
AP2 expects agricultural real estate to provide stable returns with low correlation to its existing investments, predominantly equities and bonds.
The joint venture with TIAA-CREF will also adopt an investment approach consistent with the global sustainability policies of the two institutions, both of which are signatories to the UN's Principles for Responsible Investment.
TIAA-CREF already has an established platform for agricultural investment where environmental considerations and social responsibility are integrated.
AP2 carried out a comprehensive sustainability analysis of TIAA-CREF's guidelines, policies and processes and concluded they were of "very high quality".
Eva Halvarsson, chief executive at AP2, said: "This chance to co-invest with TIAA-CREF presents the Second AP Fund with a highly attractive opportunity.
"Like us, TIAA-CREF is a long-term investor. The organisation has considerable competence in and experience of this type of investment, while also sharing our values and principles."
Halvarsson added: "TIAA-CREF enjoys an excellent reputation, not least for its active and progressive work in corporate governance and sustainability.
"We anticipate that the newly established company's investments will promote productivity gains and long-term, well-managed and profitable agriculture that, in a sustainable manner, will help meet the growing global demand."