Rural Asset Finance
(Portfolio 9)
Portfolio 9 is a funding arrangement with an
experienced asset finance originator in the UK
focused on the farming sector in the East of
England. Under the terms of the agreement, SOLO
is providing financing for new and used
agricultural equipment as well as loans secured
against agricultural land and properties.
Overview
Farmers apply to Rural Asset Finance to obtain credit for new and used agricul-
tural equipment, buildings and land with a focus on smaller scale farmers. The
support of these farmers is of particular importance at the moment as banks have
retrenched from the sector since the Global Financial Crisis, and farmers in the UK
are also facing increased challenges post-Brexit, as their subsidies from the Basic
Payment Scheme (BPS) finished at the end of 2023.
An opportunity exists for SOLO because:
•
Large banks have retrenched from the market
•
Banks (post-financial crisis) no longer have local agricultural specialists who
solely manage farmers
•
Historical perceptions about farming incomes mean most main banks will
only lend on land, leaving equipment and other capex to leasing specialists or
new lenders in the market
Total new agricultural machinery purchases in the UK are in excess of £3 billion per
annum and our partnership with Rural Asset Finance provides financing services to
small scale farmers to support them in obtaining agricultural equipment.
SOLO’s funding includes equipment which allows farmers to produce food in a
more resource-efficient way as well as having the potential to increase quantity
and quality.
KPIs
Capital deployed
£14,673,577
Total number of individual lends
153
% investments in renewable related equipment (capital deployed)
27%
% investments in renewable related equipment (#)
22%
Adherence to LCM’s Exclusion Policy
Yes
LCM Partners SOLO VII SLP | ESG Report | 08
UN SDG Alignment:
LCM has assessed Portfolio 9 for alignment with the UN SDGs. This investment is
aligned with the following:
SDG 2: Zero Hunger
2.3 Double agricultural productivity of small-scale food producers
2.4 Sustainable food production systems and resilient agricultural
practices
SDG 7: Affordable and Clean Energy
7.2 Increase substantially the share of renewable energy in the
global energy mix
SDG 9: Industry, Innovation and Infrastructure
9.4 Upgrade infrastructure and retrofit industries to make them
sustainable
Key Performance Indicators (KPIs)
LCM Partners SOLO VII SLP deployed £14.7m into Portfolio 9 during the reporting period which represents 153 individual lends. The table below shows the
Portfolio’s KPIs, with the main points to highlight as follows:
•
The majority of lending was to support food production (59%), which aligns with UN SDG 2: Zero Hunger
•
This was followed by farmers diversification activities (including renewables and sustainable tourism) at 30%, with 12% of capital deployed in other activities
59%
30%
12%
Capital deployed by activity type (£m)
Lending to support food production
Diversification (renewables / sustainable tourism etc.)
Other
52%
28%
20%
Number of investments by activity type (# lends)
Lending to support food production
Diversification (renewables / sustainable tourism etc.)
Other
Investments funded during the period include:
Tractors | Trailers | Grain Drills | Loaders | Cultivators
Robotic transplanters | Solar panels | Sprayers
Spreaders | Harvester | Excavators | Balers | Telehandler
CHP units | Milking robots | Agribuildings | Land