WATCH: Why LPs sell agriculture and timberland stakes

Sister publication Agri Investor speaks to Stephen Addicott, a timberland partner at Stafford Capital Partners, about the dynamics of secondaries in the asset classes.

Last month Stafford Capital Partners closed the eighth edition of its flagship timberland secondaries fund on $612 million. By secondaries standards, that sum is not enormous. But when it comes to timber and ag, that’s enough to place it near the top quartile – suggesting that Stafford, and its investors, reckon there is a decent crowd of LPs out there willing to exit funds. Given the painstaking due diligence it takes LPs to commit in the first place, that begs a question: Why do LP want to sell fund stakes?

Stafford’s fundraising success also indicates a growing appetite for secondaries (Timberland VIII’s predecessor closed in 2015 on $484 million). The advantages of getting into a fund that’s already at least partly invested are more straightforward: portfolio visibility, quicker diversification. That much should be obvious to many LPs. So how much of a bargain do buyers of fund stakes really tend to get?

Sister publication Agri Investor asked Stephen Addicott, a timberland partner at Stafford.