May 7, 2016

By Lynda Kiernan

Queensland Investment Corporation (QIC), the $78.5 billion investment arm of the Queensland government, has acquired an 80% stake in the North Australian Pastoral Company (NAPCo) in a deal reported to exceed $400 million.

The exact financial terms of the acquisition were not released. However, the most recent financial reports issued by the company indicates a total value of $519 million, and AFR reports that a statement filed with the London Stock Exchange reported that the sale of MP Evans’ 34% stake in the company through the transaction was valued at $79 million. Such financials could be used to conclude that the QIC acquisition could overshadow the recently rejected $371 million bid by Dakang Australia and ARC for S. Kidman.

Founded in 1877, NAPCO runs 177,978 head of cattle on 13 cattle stations across nearly six million hectares in Queensland and the Northern Territory. The company began exploring its options in 2013, however, its owners, the Foster family and co-investor agribusiness MP Evans Group, withdrew from negotiations after failing to agree on an acceptable price.

Unlike the S, Kidman deal, the bid offered by QIC on behalf of itself and the British Pension Protection Fund will not require review by Australia’s Foreign Investment Review Board (FIRB) due to the low level of foreign investment involved.

QIC CEO, Damien Frawley, who has been conducting due diligence within the cattle space for the past four years, told AFR that the investment was being viewed as having a 20-30 year timeline, stating, “This is long-term capital. What we have done is match the right capital with the right asset class.”

“An investor like QIC always looks decades ahead, not months, and can see that Queensland is perfectly positioned to produce the clean, healthy food the new Asian middle class will demand,” said Queensland Treasurer Curtis Pitt according to ABC.

This move by QIC, which is the second largest wholesale funds manager in Australia, marks its most significant venture in agriculture, and the first major investment in the cattle sector by an Australian institutional investor in nearly 20 years, after AMP sold Stanbroke Pastoral Co. for $490 million in 2003.

“Our approach is that you just don’t go and buy a farm and then all of a sudden you’re in the business and getting exposure to the sector,” QIC’s Phil Cummins told ABC. “We really like the macro story … it’s not a two to three year story, it’s a generational story.”

Australia’s Agriculture Minister, Barnaby Joyce, reiterated his challenge to the country’s superfunds to increase the nation’s capital commitments to agriculture during his address at the ABARES Outlook 2016 conference reported The Weekly Times, telling media at the event, “I just find it peculiar that a nation that is the venue for so much flow of funds from overseas to invest in our agricultural assets is not the same venue for Australian super funds to invest in.”

QIC however, had already announced in November 2015 its intent to accelerate its investments in the agriculture sector noting that Asia is expected to account for 47% of global beef exports by 2024.

“Queensland is perfectly positioned to meet the demands of the new middle class given our reputation for quality, the size of our industry and our geographic position close to the market,” said Queensland Treasurer, Curtis Pitt in a government statement, adding, “QIC’s agribusiness strategy provides opportunities for Australian and overseas investors to buy into this growth story.”