September 17, 2020

By Lynda Kiernan, Global AgInvesting Media

Australian agricultural land and water asset investor, developer, and manager, Alterra Limited, announced that it has completed a A$1.72 million placement with Emanuel Exports and Sandon Capital Investments Ltd.

The funds secured by Alterra will be used as working capital to complete feasibility studies and advance Phase I plantings for the Carpenters Project –  its 300-hectare avocado development – and to expand its south-west project pipeline.

“Alterra is pleased to welcome the addition of a sophisticated investor in the Australian agribusiness and property sectors to our share registry,” said Oliver Barnes, managing director, Alterra. “This investment is a significant endorsement of Alterra’s business model and confidence in our project pipeline.”

“We are also pleased to see Sandon Capital continuing its support of the Company,” noted Barnes. 

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 last year, 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 is prudent. Australian farmland continues to perform, as demand for agricultural assets, strong commodity prices, and low interest rates have generated value for stakeholders. Last year, the median price per hectare increased by 13.5 percent, to A$5,271 (US$3,380.40), according to the Australian Farmland Values 2020 Report recently released by Rural Bank, marking the sixth consecutive year of growth, and bringing the 20-year CAGR to 7.5 percent. 

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.

Internally, the firm also appointed Brett Heather, a veteran agribusiness executive, as its chief operating and technical officer in July 2019, and established an exclusive technical partner agreement in April 2019 with Tyson Bennet, a horticultural expert who specializes in high-value tree crops. In addition, John Poynton, a Western Australia businessman, has been named chairman of a newly-formed advisory board created to help drive Alterra’s new direction.

Under the terms of this announced placement, Emanuel – which accounts for the bulk of the investment at A$1.39 million, gaining them a 15 percent stake – will be invited to undertake due diligence on the Carpenters Project along with other potential development capital investors.

“My family has been committed to rural Western Australia for over 50 years, which started with my grandfather in the 1950s, I welcome the opportunity to expand our business operations and continue to invest in and support the WA agricultural sector,” said Nicholas Daws, managing director, Emanuel.

“We see this investment as a good logical fit with our existing business interests, and a vote of confidence in WA agriculture which we see has a vibrant and exciting future.”

Now that the project is funded to move forward with feasibility studies, plans are to source development capital from speciality industry investors and family offices in FY2021.

Additional groundwork for the development has been thoughtfully laid by Alterra as early as last year when the company made inroads into the state’s high-value avocado sector, forging a local partnership agreement with French’s Group, a family-owned enterprise that established the state’s first commercial-scale avocado operation in 1986, and has 32,000 trees producing more than 5.8 million fruit per year. 

The company also secured a significant ownership stake in Advance Packing and Marketing Services, which has the capacity to pack six million trays of avocados per year, and services more than 40 of the state’s growers.

Under the terms of the agreement, French’s Group provides Alterra with local representation, assistance with origination and due diligence on investment opportunities, and localized production and technical support for a three-year period across the Peel, South West, and Great Southern regions of Western Australia.

In turn, Alterra agreed to issue two million performance rights to French’s – the first one million rights will vest upon the finalization of a binding term sheet for the development or purchase of 50 hectares of avocados. The second million will vest upon the execution of a binding term sheet for the development or purchase of an additional 150 hectares of avocados.

Alterra has also obtained exclusive rights to local avocado genetics and production data from French’s Group in support of the Carpenter’s Project serving as the foundation for a new business model in Western Australia.

“The Carpenters Project site is exceptional with the region highly regarded for its favorable climate, reliable rainfall, excellent soil types and quality water, which makes this site a high-value asset for Alterra,” said Barnes in April of this year. 

“The Carpenters Project is a significant opportunity to launch Alterra’s new business model with an outstanding asset supported by quality management.”

– 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, and HighQuest Group’s Oilseed & Grain News. She is also a contributor to the GAI Gazette. She can be reached at lkiernan@globalaginvesting.com.