Australian cattle deals worth nearly A$800 million are in the offing.
Directly on the heels of the announcement that S. Kidman, Australia’s largest pastoral cattle company, hasagreed to be acquired by a Chinese-led consortium of Chinese and Australian buyers for $370.7 million (US$287.3 million), Queensland Investment Corporation (QIC) is reportedly also in the midst of due diligence for the purchase of the North Australian Pastoral Company (NAPCO) in a deal worth $400 million, according toThe Australian Financial Review.
As of December 31, 2014 Australia’s superannuation funds controlled total assets valued at $1.93 trillion according to data from the Australian Prudential Regulation Authority. However, an unprecedented surveyconducted by BDO and The University of Queensland found that less than 0.3% of superfund assets are considered to be within the agriculture sector as of June 30, 2014.
Australia’s Agriculture Minister, Barnaby Joyce, reiterated his challenge to the country’s superfunds to increase their capital commitments to agriculture during his address at the ABARES Outlook 2016 conference reportedThe 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.”
NAPCO, which runs 177,978 head of cattle on 13 cattle stations across 6 million hectares in Queensland and the Northern Territory, began exploring its alternatives 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.
If this deal successfully closes, it could mark the first major cattle sector deal by an Australian institutional investor in more than ten years since financial services company, AMP sold the Stanbroke Pastoral Companyto a consortium of five Australian families and fast food entrepreneur, Jack Cowin for more than $490 million.