Andrew Mouat: Investing in water

Kilter Rural has appointed a former BT and Pendal executive to raise capital for its managed water and agriculture funds.

The new head of growth and distribution brings with him 30 years of experience in financial markets across equities, ECM, and senior management.

Most recently, he was head of growth and distribution at Tanarra Capital, the boutique alternative asset manager ,and before that spent more than six years at BT Investment Management and Pendal.

Earlier, he was Macquarie's country head in India.

Mouat said it was a tremendously exciting time to be part of Kilter at such an inflection point, where greater investment is being deployed into natural capital assets to help alleviate the impacts of climate change.

"What attracted me to Kilter Rural, was the authenticity of the team and their firm belief in sustainable agriculture, efficient water use and the restoration of natural landscapes, such as the partnership with The Nature Conservancy to restore wetlands," he said.

"The business was started by the chief executive and investment chief because of their experience in Australian natural assets. The financial returns are an outcome of bringing that expertise to irrigators and rural communities.

"They're not financial types who are trading this from an office in Collins St, but on the ground working in regional Australia, it's boots, not suits."

Investing in the  regeneration of farmland and water suits Mouat as he likes the alternatives space.

As he sees it, there is no longer any traction for capital allocators to look at purely vanilla funds.

Return on the funds comes from the capital growth of water entitlements and leasing the annual allocation to irrigators.

Importantly, assets have zero correlation to bonds and equities.
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Family offices and high-net-worth individuals make up the bulk of investors.

The firm also has a mandate from offshore institutions.

"We think there is more capital looking for long-duration alternative assets. Moreover, the sector is hungry for institutional capital."

Mouat noted that water supplied to irrigators has dropped by 50 per cent whilst the value of irrigated and permanent Agri/horticulture has grown by 500 per cent.

Kilter Rural has booked 14.8 per cent annualised returns since 2014.

Chief executive Cullen Gunn said he looks forward to working with Andrew as Kilter continues to deliver profit with impact for  investors.
Kilter Rural - which operates two water investment funds and an agricultural fund - has $340 million in funds under management.