November 10, 2017

Canadian pension fund – Public Sector Pension Investment Board (PSP Investments) – has expanded its Australian beef and cattle holdings, bringing its total capital commitments to the industry to A$120 million (US$92 million).

Through its joint partner, Hewitt Cattle Australia (HCA), the fund has acquired a 15 percent stake in Arcadian Organic Natural Meat Co., one of the largest organic meat companies in the country, and one that has been searching for an investor for more than a year. Under the terms of the deal, HCA also will acquire two cattle stations – the 28,340-hectare Oakwood Station in western Queensland, and the 1,740-hectare Warilba Station in western New South Wales.

From beginning to end, the deal took about a year-and-a-half to complete, according to the Australian Financial Review, which goes on to state that total value of the deal is in the region of $50 million.

The Canadian fund cut its first Australian farmland deal in 2015 when it acquired Sir Graham McCampley’s 13,650-hectare Oakleigh and Stoodleigh stations for approximately $13 million in 2015. Today, the Oakwood and Warilba Stations along with the stake in Arcadian Organic Natural Meat will join a growing portfolio that includes the Ambalindum and Numery stations that HCA acquired earlier this year in April for A$50 million (US$33 million).

Three years of acquisitions and portfolio building has brought HCA to now manage 85,000 head of cattle across 600,000 hectares, making it a rival of standing among a flurry of large scale deals that brought the likes of Gina Rinehart, who together with China’s Shanghai CRED, acquired the S. Kidman cattle empire for A$386.5 million in 2016, and Andrew Forrest, who’s Minderoo Group expanded its cattle holdings to more than 1 million hectares.

It was not only the potential for growth for Australian beef that drew HCA and PSP to Arcadian, but the further promise for organic beef.

Cleaver – Arcadian’s top brand, is the most successful organic meat brand in the country; selling through domestic supermarkets as well as being exported to nine foreign markets, and which will be a focus for development by HCA.

“We have partnered with Arcadian because we share a commitment to this industry and are prepared to invest in it,” Mick Hewitt, CEO of HCA, told AFR. “We strongly believe that rapid growth in the organic segment will continue, and see evidence of this in a number of ways including the ongoing strength of our Cleaver’s brand.”

For Arcadian, the deal is highly complementary and positions the company to be better able to make the investments necessary to grow.

“We not only need to grow our supply base but also want bring a bit of sophistication into the supply chain as far as our ability to finish animals,” Alister Ferguson, founder and CEO of Arcadian, told Farmland Grab. “Certainly raising some capital to invest in our markets both here and overseas is also a key part of the deal. We have a processing facility at Gosford in NSW which we continue to invest in and at some point will need upgrading but the real opportunities we see are around product innovation and value adding.”

-Lynda Kiernan