April 19, 2024

By Lynda Kiernan-Stone, Global AgInvesting Media

Canada’s PSP Investments, the fourth-largest pension manager in the world with a total CAD$243.7 billion (US$177.4 billion) in AUM and a Natural Resources Group with CAD$12.3 billion (US$8.95 billion) of net AUM as of March 31, 2023, has recently executed two major agricultural investments – one itself, and one through Altora Ag – a joint venture between BFB and Daybreak Cropping created by PSP in 2022. 

Ellerslie Free Range Farms

In mid-March, PSP Investments acquired a major strategic interest in leading Australian egg producer Ellerslie Free Range Farms alongside the Hall family, who founded the company in the 1960s with a single farm. 

“Over more than 60 years, the Hall family has built one of Australia’s leading egg producers and contributed to building one of the country’s most iconic brands,” said Marc Drouin, senior managing director, real assets, and global head of natural resources, PSP.

“Our investment in this business is very much aligned with our approach of investing alongside best-in-class, local operators who share our values, long-term horizon and commitment to sustainable farming. In many cases, this results in us investing alongside farming families who have cared for their land and animals for generations. That’s what we have found in Ellerslie.”

Located in Queensland, the company is one of the country’s largest egg producers. It also holds a 50 percent stake in Sunny Queens, one of Australia’s largest egg processors and distributors, and controls the 2,900-hectare (7,166-acre) Yallamundi Farm that produces pasture-raised and organic eggs from a flock that exists amid olive tree orchards totaling 300,000 trees. 

And although both parties have declined to disclose the financial details of the deal, AFR reported that corporate filings indicate that PSP was issued 180.5 million shares valued at A$1 per share in Ellerslie at the end of February, representing a 60 percent stake in the company.

Despite the volatility of market conditions, Australia’s 561 egg businesses (as of August 2023) have benefited from rising per capita egg consumption (Australians consume 18.9 million eggs per day) as consumers increasingly opt for eggs over red meat for their protein.

There are three main methods of egg production in Australia: free range, cage-laid, and barn-laid. As of June 2023, the country’s egg industry reported a national flock of 21,829,208 layer hens, and over the past 15 years, free-range production has increased to account for approximately 56.5 percent of retail sales, while cage-laid eggs are being phased out of Australia by 2036. 

PSP explained that this transaction has already received approval from Australia’s Foreign Investment Review Board (FIRB), and will not result in any changes to the Ellerslie business, its 400 employees, or its relationships with customers and suppliers. 

“While for our people and partners it will be business as usual, we know that PSP Investments’ global scale will help us accelerate our plans to significantly increase cage free production in the coming years,” said Greg Quinn, CEO and managing director, Ellerslie. 

“I look forward to working with PSP Investments and I know that we are absolutely like-minded in our shared commitment to the highest standards of quality, sustainability and animal welfare.”

Timberscombe

Altora Ag, a venture created by PSP in 2022 through the merging of BFB in Temora, and Daybreak Cropping in southern New South Wales that created the largest broadacre agribusiness in the country with over 153,000 hectares (378,071 acres) of land under its brand, agreed to acquire Timberscombe from Duxton Farms for A$70 million (US$45 million). 

One of the largest contiguous cropping assets in the area, Timberscombe encompasses 8,432 hectares (20,836 acres) of land, of which 7,794 hectares (19, 259 acres) are arable. It also includes 8,498 tons of grain storage, machinery shed, a manager’s housing, and two additional residences. 

This divestment is intended to rebalance Duxton’s portfolio and shift the center of focus from traditional landscape broadacre cropping in New South Wales to new growth opportunities in Australian agriculture that will require ongoing CAPEX, which is expected to put short-term pressure on earning, but which the Board believes will build significant value in the long-term.

Duxton stated that the proceeds from this sale will be used for three primary purposes:

~ Investing in growth strategies in the Northern Territory, Victoria, and New South Wales through both direct and equity investment. 

~ The reduction of debt. 

~ Payments of a distribution to shareholders. 

“Timberscombe has been a significant part of Duxton’s broadacre farming portfolio since 2008, and it has been a fantastic asset for us,” said Ed Peter, chairman, Duxton Farms.

“This sale allows us to redeploy capital into growth and development projects that are better suited to the Company’s expanding strategic scope, and to pay a small distribution to investors as a thanks for their support so far.”

~ Lynda Kiernan-Stone is editor in chief with GAI Media, and is managing editor and daily contributor for Global AgInvesting’s AgInvesting Weekly News and Agtech Intel News. She can be reached at lkiernan-stone@globalaginvesting.com.

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