June 9, 2022

By Lynda Kiernan-Stone, Global AgInvesting Media

Australia’s AAM Investment Group (AAMIG) launched its fourth fund, the AAM Diversified Agriculture Fund (ADAF), at the end of 2019 with an initial goal of raising A$60 million. After the turn of that year, AAMIG stated it intended to undertake further fundraising to support the acquisition of complementary premium agricultural assets that will be a balance of income-style and strategic investments serving to diversify the existing portfolio.

Toward that end, ADAF’s strategy involves diversifying and scaling across mainstream categories within Australian agriculture – grains, lamb, beef, and poultry – operating under its guiding principles of strategic investment, development, operational efficiency, and sustainability, AAM aims to generate stable cash distributions, development potential, and capital growth of real assets with a targeted distribution yield of between 7-8 percent, and a total return exceeding 12 percent. (page 7)

Upon its launch ADAF had a basis consisting of:

~ Southern Cross Poultry Fund: holder of a large-scale poultry farming infrastructure facility in South Australia producing more than 10 million chickens per year. The initial capital raise, which exceeded expectations, enabled the addition of 48 sheds, which lifted production to 20 million chickens per year across South Australia. 

~ Pastoral Development Trust: holder of the 178,870-hectare Legune Station, a large-scale cattle station in the Northern Territory with carrying capacity of 33,034 head, a 35,100 megaliter dam (the largest privately-held dam in the country), and access to an additional 106,400 hectares of licensed productive land.

~ And the Sustainable Softwood Trust: holder of a stand-alone softwood saw milling facility in New South Wales processing 92,000m3 of raw material per year, with development approval for 210,000m3.

In April 2020, ADAF confirmed that it had completed an off-market deal to acquire Terrick Terrick, a 55,000-hectare (138,000) acre property from long-time owners Russel Pearson and the Pearson family, for an undisclosed amount. 

At the time, AAM stated that Terrick Terrick, located in the Blackall region of Queensland, would be the foundation on which AAM’s Diversified Agriculture Fund builds out its beef holdings, which are expected to account for 40 percent of the fund’s allocations, adding that it had a number of complementary asset acquisitions in its sights, including large-scale breeding operations surrounding the Blackall region, and also will consider the future acquisition or partial investment in feedlots. 

In October 2021, the fund expanded further when it executed multiple deals totaling A$100 million including the acquisition of Mount Harden beef aggregation for A$24.8 million, and two timber businesses –  N.F. McDonnell & Sons and Perma-Log Timber – for approximately A$75 million (US$56 million). 

Today, AAMIG is working with National Australia Bank to raise an additional A$60 million (scheduled to close June 28) to fund the further build-out of its beef supply chain holdings in Northern Australia (a region that AAM has identified as having vast potential and resources, but that lacks deployed capital), including the purchase of another 40,000 head of cattle. 

Plans also include the acquisition of sheep and grazing assets in New South Wales, and the strengthening of its sustainable fiber supply chain, to augment its existing sustainable softwood processing holdings, including N.F. McDonnel & Sons, located in Mount Gambier in Australia’s “Green Triangle” region; and Perma-Log Timber, located in Narangba, in southeast Queensland.

Garry Edwards, managing director, AAM, said, “The time is right for Northern Australia to realize its potential as a powerhouse of the Australian agriculture sector and AAM is committed to what we believe will be a genuinely transformational program of long-term growth in that region.”

~ 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 Unconventional Ag. She can be reached at lkiernan-stone@globalaginvesting.com.

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