May 13, 2021

By Lynda Kiernan, Global AgInvesting Media

Australian agricultural land and water asset investor, developer, and manager Alterra Limited has announced a capital raising of up to another A$3.7 million (US$2.86 million) in funding through a deal in which a company associated with Pendulum Capital, led by Peter Fogarty and Greg Harvey, will acquire a 19.9 percent stake in the company. 

The capital raising is comprised of a placement at $0.04 per share to raise $1.85 million, and a 1-for-5 pro-rata non-renounceable entitlement offer at the same price to raise another $1.85 million – representing a 7 percent discount to Alterra’s 30-day volume average weighted share price.

Eligible Alterra shareholders (including those who participated in the placement) will be able to participate in the Entitlement offer, which will be open to all shareholders with a registered address in Australia and New Zealand on May 18, 2021.

“Pendulum has a great track record in the agribusiness and horticulture sectors, and Alterra looks forward to their contribution as investors for the benefit of all of our shareholders,” said John McGlue, chairman, Alterra.

A Prudent Pivot

Until 2018, Alterra’s business was to take suboptimal parcels of land and redirect them into carbon sinks formed under legacy deals that would generate income over a period of time. However, after de-merging its carbon-conscious business in 2019, Alterra’s strategy moving forward is to develop underutilized or undervalued farmland with reliable water supplies into investment-grade agricultural assets, and, in certain cases, to also manage operations.

The pivot was prudent. Australian farmland continues to perform, as demand for agricultural assets, strong commodity prices, and low interest rates have generated value for stakeholders. For the past two decades Australian farmland values have continued to climb at an average growth rate of 7.5 percent, (approximately the same rate of return seen from the ASX and greater than returns seen on the residential property market), according to Rural Bank. 

This strength played out in March of this year, reports ABC, when a 442-acre parcel in Victoria sold for $23,588 per hectare, or $9,550 per acre – more than triple the average value per hectare of land ($7,590) in 2019. 

Alterra’s shift into agriculture has begun with a focus on avocados, with the launch of the Carpenters Project in Pemberton, in Western Australia. A special purpose vehicle (SPV) called Carpenters Beedelup Pty Ltd. had been established to develop the project that has secured a 30-year lease, including a 10-year plus, 10-year option on the land and water resources from Red Moon Property Holdings Pty Ltd., an entity associated with the Casotti Group, the largest privately-owned fruit grower, packer, and wholesaler in Western Australia.

It is this project in Western Australia’s South West that Alterra will use this latest capital to advance into its next phase. It also will provide Alterra with a platform from which to pursue other opportunities across the horticulture and agriculture sectors.

The deal also links Alterra to the expertise and successful track record in agricultural investment and advisory roles in connection with some of the biggest agricultural transactions in Australia that Fogerty and Harvey bring.

Aside from ag investment and advisory, Fogerty is the founder of the Fogarty Wine Group – Margaret River’s largest wine producer with assets stretching across Western Australia, New South Wales, Victoria, and Tasmania.

Meanwhile, Harvey was most recently managing director and CEO of the Forrest family’s Harvest Road Group food business, following being the long-standing CEO of Interflour Group – of the the largest grain processing and ag port operators in Asia.

Fogerty commented, “Pendulum has invested in Alterra because of its flagship Carpenters avocado project and its potential to take advantage of the abundance of opportunities in horticulture and agriculture. We look forward to working with Alterra to realize its growth potential.”

– Lynda Kiernan is editor with GAI Media, and is managing editor and daily contributor for Global AgInvesting’s AgInvesting Weekly News and  Agtech Intel News, as well as HighQuest Group’s Oilseed & Grain News. She can be reached at lkiernan@globalaginvesting.com.