Farmland investment play for retail investors as Greenshields Agri plans AIM IPO

Company plans to raise £3m on London’s junior market

Farmland investment play for retail investors as Greenshields Agri plans AIM IPO

Edinburgh-based farming group Greenshields Agri Holdings Plc recently announced its intention to seek listing on the London Stock Exchange’s AIM market, offering investors the opportunity to add farmland investments to their portfolio. The company is planning to raise an additional £3 million in capital when listing, as it seeks resources to expand operations and diversify income.

In a statement, the group underscored a number of key strengths that would help it secure investor confidence and launch a successful initial public offering (IPO). Greenshields pointed to the Savills Market Survey of UK Agricultural Land 2015, which found that arable UK farmland prices had increased 14 percent in last year, a further 12 percent in 2013 and a total cumulative 277 percent over the past ten years, while prime London property had gained just 135 percent for the same period. The review also suggested the tendency will remain largely intact, with farmland prices projected to add between six and eight percent per annum over the next five years.

Greenshields also noted that crops in the Northern Grain Belt, where the company owns and operates land, benefit from longer daylight in the summer, helping the group outperform the average UK yield, adding that it will also benefit from rising global demand for grains and investor demand for tax-efficient investment, such as farmland.

"The Board is very excited about this opportunity, which would make Greenshields the only UK publicly traded company which gives investors access to UK farmland ownership and an established arable farming business,” Greenshields chief executive Bill Boase commented. "We are committed to growing the business and delivering value to our shareholders."

While analysts agreed that a farmland investment opportunity through Greenshields stock presents an appealing possibility, farming itself is hardly profitable.

“If you buy land and farm it, the returns from farming, even if you’re average or good, will be less than one percent,” said Richard King, head of research at farm business consultancy Andersons, as quoted by The Financial Times.

The Greenshields Agri IPO would be the latest in a number of highly-interesting flotations on the LSE this year, following ‘challenger’ bank Aldermore and Hungarian airline Wizz Air, whose performance in the first quarter significantly outshined that of blue-chip benchmark FTSE 100.

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