September 8, 2021

By Lynda Kiernan-Stone, Global AgInvesting Media

Australia’s Aware Super is taking steps to divest its 9,004-hectare Lake Boga agricultural portfolio, which has been part of a 15-year management partnership with Kilter Rural to regenerate the land and to deliver benefits that are environmental, commercial, and social in nature. 

Formerly known as First State Super, the fund changed its name to Aware Super in September 2020. Today, Aware Super is one of Australia’s largest funds, managing VicSuper and WA Super, and $150 billion for more than 1 million members nationwide.

Comprising 38 organic, traditional, horticultural, and broadacre cropping farms, the Lake Boga assets are situated between Lake Boga and Kerang in northern Victoria. Within the portfolio are 3,600 hectares under irrigation, Victoria’s largest field tomato grower, a commercial-scale Queen Garnet plum orchard, a sheep grazing operation, winter cereal acreage, committed biodiversity zones that bring opportunities for future carbon offsets, and 20,000 megaliters of Goulburn-Murray Irrigation District water entitlements.

When first acquired, Cullen Gunn, CEO, Kilter Rural, noted that 95 percent of the land had been subject to inefficient irrigation practices, which negatively impacted soil productivity, water quality, and biodiversity.

“When we first purchased this land, our intention was to acquire under-scaled and underutilized land, invest in world leading soil remediation and irrigation infrastructure, and eventually exit a profitable farming operation with a bright, long-term future,” said Gunn. “We believe we have more than achieved that goal.”

Over the course of the past 15 years under Kilter Rural management, Boga Lake’s farmland has been transformed into a highly sustainable business with rehabilitated environmental assets, according to Gunn, who added that the high-value crops, market-leading irrigation, and long-term potential make this an attractive opportunity for new investors.

Improvements include the planting of 190,000 seedlings, and 690 hectares of direct seeding for environmental forestry and enhanced biodiversity. Rehabilitation efforts have also seen the restoration of the Winlaton Depression – a significant local environmental asset.

Mark Hector, senior portfolio manager, infrastructure and real assets, for Aware Super, commented that after 15 years it was time for new investors to step in to support the long-term prosperity of these assets.

“At Aware Super our primary purpose is to do well for our members through strong, sustainable long-term returns, while doing good in our community,” said Hector. “Investments like this are great examples of how we live this purpose every day. We’re proud of what this investment has accomplished since its inception and the impact it has had on the local community through land regeneration and job creation.”

This is not goodbye

The decision by Aware Super to divest Boga Lake was made in alignment with broader portfolio decisions that involve occasional strategic divestment after a period of transformation and growth, with the intention to recycle capital into new value-added investment opportunities.

This, however, does not mean that Aware Super is signing-off from agriculture, noted Mark Hector, who said, “Aware Super has had a long interest in agriculture as an asset class and will continue to investigate future opportunities in this sector.”

In the near future, Greg Quinn, partner with PwC, which has been tasked by Aware Super to manage the sale along with Land Agribusiness Water Development (LAWD), will be scheduling a two-phase auction. The process is expected to be finalized by the end of the year with the assets fetching $150 million or more.

It is anticipated that a roster of top international investors will take interest including Canada’s Ontario Teachers’ Pension Plan (OTPP), which acquired four family-run orchards in the Goulburn Valley in Victoria in April of this year; Sydney-based Roc Partners, which acquired Australia’s largest honey producer in 2018, acquired Emerald Grain in 2020, and invested in tomato business Flavorite last year; MIRA, which just acquired the Vitalharvest REIT; or U.S.-based Hancock, which is a prominent owner of Australian almond and forestry assets. 

– Lynda Kiernan-Stone 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-stone@globalaginvesting.com.