Investing in Agriculture, Water and Other Scarce Resources

8/3/2019 Investing in Agriculture, Water and Other Scarce Resources

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Investing in the future of our planet and the most compelling fundamental mega macrotrends facing our world. This prudently managed multi manager fund harnesses thecollective expertise and resources of some of the world's premier niche managersfocused on the growing agriculture, water and scarce natural resources sectors.

w w w . A Q U A T E R R A F U N D . c o m



MACRO HIGHLIGHTS

• 80+ million people joining the planet each year

• Rapid industrialization of India, China, South East Asia, Latin America causing severe strain

on existing resources

• Severe water stress experienced in most productive parts of the world

• Exciting opportunity set throughout agriculture and scarce resource complex through

niche boutique specialists across the world

THE AQUATERRA FUND IS A CARVE OUT OF THE FOLLOWING EXISTING STRATEGIES OF THE

EARTH WIND & FIRE FUND

• Agriculture

• Water

• Natural Resources

SIGNIFICANT ALPHA ADDED THROUGH

• Diversification across asset classes, geographies, instruments & styles

• Manager selection & deep due diligence

• Tactical global macro asset allocation

THE BEST INVESTMENTS ARE WHEN NECCESSITY CREATES OPPORTUNITY

THE GREATEST NEEDS OF OUR LIFE TIME – WATER & NATURAL RESOURCES

THE GREATEST OPPORTUNITY OF OUR LIFE TIME – WATER & NATURAL RESOURC

ABOUT GLOBAL FUND EXCHANGE

•

Global Fund Exchange Ltd is an investment manager offering sensible diversified portfoliosolutions to institutional investors. These are often customized to the particular

requirements of our clients, optimizing returns and controlling risk

• Global Fund Exchange has constructed tailor made multi manager portfolios exceeding

US$ 2billion for some of the world’s most sophisticated pension funds, sovereign funds

and other institutions

• Specialists in Global Tactical Asset Allocation, Alternative Investments, Energy, Commodity

and Multi strategies

• Seasoned principals have 40+ years experience in financial markets

ABOUT THE FUND

• Cayman Master Feeder Structure

• Monthly Dealing / Quarterly Redemption

• Low minimum investment from $1MM

• Custodian: Deutsche Bank (Cayman)

• Auditor: Eisner LLP

• Administrator: Deutsche Bank Alternative Fund Services



Catalysts for investment

• Limited resources, increasing demand and rising food prices provide compelling reasons

to invest in global agriculture

• SIGIFICANT opportunities in commodities, farming & seed technology and agribusiness.

Exponential population growth

• How will we feed 9 billion+ people by 2050? FAO reports global agri production must

increase 70% to meet new demand

• Nearly all new demand coming from developing world, where agri output is set to double

• Stock market cap in developing nations expected to grow fivefold over next 20 years to

over $80 trillion; an indicator of rising regional wealth

• Historic shift in global dietary patterns as middle class shifts to a more meat-centric /

energy-intensive diet

• Significant trend in developing countries, where meat consumption is growing 3X faster

than rest of the world.

Commodity volatility

• Record high food prices and market volatility

• Weather anomalies and pattern shifts have devastated crops, leading to unprecedented

jumps in wheat, soybeans, corn, coffee, sugar and other basic commodities

• Over next decade, FAO expects grain prices to remain 15-40% above 1997-2006 levels

• Fears of “agflation” as consumers face higher costs across entire food production chain.

Looming food supply/demand gap

• USDA reports meeting projected food demand in 2030 would require additional acreage

equal to the total planted cropland in the United States, Brazil and Argentina today• Investment in agriculture must rise 47% to $279 billion/yearat a minimum, says FAO

• Despite years of advances, gains in agri yield per acre have slowed to less than 1% a year

• Agri-science and technology attracting significant new investment and government focus

Biofuels compete for farmland & water

• New mandates will require 240 million more acres for dedicated biofuel crops;

representing 50% of all arable land in North America and 6% of world total

• 1 out of every 4 ears of harvested corn in the U.S. - the world’s largest producer - winds

up in an ethanol plant. U.S. farmland has doubled in value over past decade.

Land grab phenomenon

• In 2009, foreign investors purchased 111 million acres of farmland in the developing world

– a tenfold increase over ten years.

• Two-thirds of land deals have been made in Africa. The biggest buyers? Sovereign wealth

funds from China, India & Middle Eastern countries looking for secure supplies

Agriculture provides a multi-faceted global opportunity set for investors. By partnering

with selected, niche sub-specialists, the AquaTerra Fund invests “from field to fork” across

the agriculture supply chain in a wide range of geographies and asset classes.

AGRICULTURE



The energy/water nexus

• Approx. 800 million gallons of petroleum are refined in the U.S. every day, requiring 1-2

billion gallons of water• Extracting oil from aging oil fields or unconventional sources requires vast amounts of

water. Tar sands require nearly 10X more water than conventional oil extraction. Every

barrel of oil obtained from tar sands requires 5 barrels of water

• Electric power industry is 2nd largest user of water in the U.S. behind agriculture,

consuming 39% of total freshwater supplies

Advances in desalination, smart metering and wastewater treatment

• More than 7,500 desalination plants in use around the world; 60% in the MENA region

• By 2025, the U.N. predicts use of desalination will double worldwide

• Wastewater reserves account for 2% of all global water supplies. Sector gaining interest

because treatment costs are typically one-third less than desalination• China to double water and wastewater investments in 12 th Five Year Plan, with over $4.5

billion new investment allocated between 2011-2015

Water provides some of the world’s largest and most interesting investment opportunities

The water/energy conundrum is intensifying, and water scarcity is a serious and worsening

global issue. The water sector is predicted to grow to over $6 trillion over the next two

decades, providing ample opportunities for investors who understand the space.

WATER

Growing scarcity of freshwater

• Current freshwater sources satisfy only 50% of world demand. By 2025, the world will

need 25% more water than is currently available

• Humans are extracting freshwater at a rate of 14million acre-feet/year – up to 100X the

natural replacement rate

• UNICEF & WHO report 884 million people lack safe drinking water; another 2.5 billion lack

water for basic sanitation• Contaminated water and poor sanitation contribute to the deaths of 5 million people

annually; more than all forms of violence combined, including wars

• Water scarcity is already an economic constraint in major growth markets such as China,

India, Indonesia, Australia and the Western U.S., warns the U.N. By 2025, per capita water

availability in the Gulf will likely decrease by 50%

High demand from agriculture

• Nearly 70% of global water consumption used for agricultural irrigation. In developing

nations, this amount can be as high as 90%

• Every year, global agri sector wastes approx. 60% of the 2,500 trillion liters of water it uses

• Dangerous aquifer depletion occurring in major agricultural centers, including NW India,

NE China, NE Pakistan, and SW U.S.

Inefficient water infrastructure

• Municipalities commonly lose up to 50% of their water supplies to leaks. In the U.S., a

projected $1 trillion in infrastructure spending will be required to overhaul pipeline system



NATURAL RESOURCES

China dominates rare earth market

• China controls 95% of global supplies of these elements, crucial for solar panels, wind

turbines, high tech devices, advanced batteries and electric vehicles

• Global search for new mining regions in Mongolia, United States & Australia

Lithium - “the most sought after – and fought over – commodity on the planet”

• Lithium used in 25% of total world battery production in 2008

• Korea, Japan & other Asian nations stockpiling 150,000 tons of lithium produced in West

Australia.

• In 2011, China plans to increase lithium production 500% over 2010 levels

Increasing demand for forest products

• Since 2008, log exports to China rose 600% on new government housing targets

• Demand for food, wood fuel and timber contributing to global forest destruction withsevere implications for water resources, soil conditions and ultimately crop yields

• Timber used in production of cellulosic ethanol, a growing source of renewable fuel

The rapid emergence of developing industrial powers poses a complex challenge for global

resources markets. Increasing demand in the absence of sufficient investment in new

infrastructure is widening the global “natural resources deficit.” Investing in natural

resources is a crucial element of the investment strategy of the AquaTerra Fund.

Resource demand from developing world to exceed developed world by 2015

• Demand for iron-ore, aluminum and copper to double over next 15 years. High demand

straininginternational supplies

• Copper demand to exceed mine output by 822,000 metric tons in 2011, more than double

last year’s shortfall. Prices have more than tripled since end of 2008

• China now world’s largest consumer of metals; uses 1/3 of world’s aluminum, ¼ of copper,

1/10 of oil and ½ of iron ore resourcesBy 2030, additional demand would require…

• Another Pilbara region (Australia) every 5 years to meet iron demand

• Another Saguenay (Canada) every 9 months to meet aluminum demand

• Another Escondida (Chile) every year to meet copper demand

• Another Hunter Valley (Australia) every year to meet coal demand

• Another Ranger (Australia) every four years to meet uranium demand

Coal is king

• One 1,200 MW coal-fired power plant is being built every week in China

•

China on track to triple its coal consumption and become a net coal importer• India’s coal imports are up 10X over past decade and reached record highs in 2010.

Predicted to rise another 20% in 2011

• Demand/supply shortage of coal expected to reach 142 million tons next year in India



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Investing in Agriculture, Water and Other Scarce Resources

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