May 23, 2017

Roc Partners has acquired a majority stake in Stone Axe Pastoral Company, an Australian enterprise located in Kojonup that is aiming to establish a large scale, vertically integrated full-blood Wagyu beef breeding herd, feedlot, and abattoir in exchange for an undisclosed investment.

Founded in 2014 by Cicero Group founders, Matthew Walker and James Robinson, Stone Axe Pastoral is targeting a $100 million plan that calls for the building of a full-blood Wagyu breeding herd, a 30,000 head capacity abattoir, and a 20,000 head capacity feedlot at its 3,000 hectare Cheviot Hills property.

Currently Stone Axe is stockpiling frozen embryos sourced from its own herd of 1,000 donor cattle being kept at a center in New South Wales, with plans for the first embryo transplant to happen later this spring, according to The West Australian. Up to 2,000 full blood Wagyu embryos are expected to be transferred into Angus recipients under Stone Axe’s proof-of-concept program that will be under trial for a year before being scaled up.

“A cow can produce about 20 embryos per month,” Walker told Farm Weekly. “We are in a hurry to ramp up our numbers. We intend to intensify our model to about 5000 transfers a year when we crank up – globally no one is doing this.”

Roc

Roc Partners is a leading alternative investment manager that was created following the management buy-out of Macquarie Group’s private markets business by its senior team in 2014.

Forgoing a fund of funds structure to directly invest in agriculture and alternative investments, Roc bridges private equity with non-traditional targets. With more than $4.6 billion in assets, the firm mainly invests on behalf of the country’s superfunds.

Traditional fund of funds clients such as global pension funds and sovereign wealth funds have developed in-house resources giving them the option to take their business directly to private equity firms and bypass intermediaries such as fund of funds managers. In addition, investors are seeking greater exposure to alternative asset classes often not targeted by traditional private equity firms. Through its shift in investment approach, Roc Partners aims to fill that void.  

“This commitment, from one of the pre-eminent investment managers in the Asia Pacific region, is deemed an endorsement of the business model and commercial opportunity,” Walker told Farm Weekly.  “We are particularly delighted to have received this equity support from Australian superannuation funds, which have historically been limited participants in the agriculture sector, allowing the company to remain in Australian hands.”

Plans

Stone Axe has submitted plans to Kojonup for a processing facility and associated uses to the shire of Kojonup which was approved without modification, and additional plans for the proposed abattoir will be submitted in September, according to Walker.

The Cheviot Hills property secured a 634 megaliter groundwater license in 2014 and approvals for the feedlot from the Department of Environment Regulation in 2016, however further approvals regarding the construction phase of the project will likely need time, leaving Stone Axe to concentrate on building its herd numbers.

So far, Stone Axe has earmarked $25 million for the construction of the feedlot and the abattoir, which at least initially, will be open for use to outside beef producers in the area.

“We believe the long history of the Walker family in the Wagyu industry, combined with equity investment from patient, long-term investors in Australian superannuation funds, will create a highly successful, market-leading business,” Roc partner Michael Lukin, who will now be chairman of Stone Axe, told Farm Weekly.  

“We also believe there will be further opportunities for capital investment through the Stone Axe platform as the popularity of the Wagyu breed continues to grow.”

-Lynda Kiernan

Lynda Kiernan is Editor with GAI Media and daily contributor to GAI News. If you would like to submit a contribution for consideration, please contact Ms. Kiernan at lkiernan@globalaginvesting.com.