July 24, 2017

Amid a review of its investments, Hassad Australia, a $469 million farming company and wholly owned subsidiary of Qatar’s sovereign wealth fund, the Qatar Investment Authority, has sold the Clover Downs Station located in Queensland, Australia, to farmer Bill Zell for $27 million.

Originally acquired by Hassad Australia from Clyde Agriculture in 2010 for $18.5 million, the 125,000-hectare Clover Downs is operated as a large-scale sheep breeding hub, and is one of 13 Australian properties in Hassad Australia’s portfolio, that spans the states of New South Wales, Queensland, Victoria, Western Australia, and South Australia.

This is the second asset sale for Hassad Australia, following the sale of the first property the company bought in Australia – the 2,632-hectare Kaladbro Station – to Tom and Pat Brinkworth in a deal reported to be valued at more than $20 million.

This is also not the first large-scale acquisition for Zell, who in 2012 acquired the 35,600-hectare “Collymongle” station in New South Wales from the Twynam Group for more than $40 million.

A Shift in Goals

The move to sell off select farming assets is the result of Hassad Australia’s shift in focus from ensuring food security to achieving optimum return on investments for its investors through shifting investments downstream in the food supply chain.

Dry weather has been a challenge for Clover Downs since its addition to Hassad’s portfolio in 2010, and the company has stopped exporting sheep out of Portland Kaladbro, prompting the company to divest.

“We believe the property is no longer strategic to the company,” John McKillop, managing director at Hassad Australia, told AFR. “And going forward we will focus our attention on downstream operations such as marketing and processing.”

But, despite the asset sales and evolution of focus, Hassad remains dedicated to Australian farmland, as McKillop told the Weekly Times that the company was simply undertaking a “rebalancing” of its portfolio.

However, Hassad Australia has had a hard go of making a profit from its sheep and cereals holdings in the country, which total about 300,000 hectares.

The company has faced headwinds due to not being able to scale up quickly enough, and in 2015 the holding company posted $4.87 million after-tax profit, after posting $4.18 million the year before.

Troubles At Home

Qatar is also facing troubles at home after reports surfaced alleging that the country paid US$1 billion in ransom to release members of Qatar’s royal family that were kidnapped while on a falcon hunting trip in Iraq in 2015.

Now, neighboring Middle Eastern countries are contending that the money went to fund al-Qaeda affiliates fighting in Syria, and have cut ties with the country after accusing Qatar of supporting terrorism – something that Qatar refutes as baseless.

Despite its protest, the escalation of tensions in the region has left Qatar to find alternative trade partners and food sources.

-Lynda Kiernan

Lynda Kiernan is Editor with GAI Media and daily contributor to GAI News. If you would like to submit a contribution for consideration, please contact Ms. Kiernan at lkiernan@globalaginvesting.com.