Australian Financial Review | 1 May 2024Qantas Super puts $200m into farms backed by Costa family
by Larry Schlesinger
Qantas Super plans to generate a higher proportion of returns from the agricultural sector after committing $200 million to the development of high-yielding horticultural crops on properties managed by farmland investor goFARM.
The majority of the funds – $150 million – has already been allocated to two goFARM assets, the Riverina Trust, a 1758-hectare aggregation of irrigated farms near Griffith in the Murrumbidgee Irrigation Area, (including 5000 megalitres of water entitlements) and Sandmount Farms, a 6500ha portfolio with 50,000 megalitres of water near Katunga in Victoria’s Goulburn Valley.
GoFARM, which is 50 per cent owned by Costa Asset Management, the family office of Robert and Adrian Costa (younger brothers of the late Rich Lister Frank Costa) has committed more than $100 million of its own money into these two assets.
The firm’s founder and managing director, Liam Lenaghan, told The Australian Financial Review the investment by the $9 billion industry super fund was a sign of the growing appetite among local institutional investors for agricultural assets.
Although local super funds invest in agriculture, their investment to date has been relatively minor and dwarfed by offshore pension funds such as Canada’s PSP Investments, the largest institutional investor in Australian agriculture.
“I think this deal with Qantas Super is a sign of more appetite from local super funds,” Mr Lenaghan said.
“It’s the first corporate or industry superannuation we’ve partnered with. With our roots in family offices and high net worth investors, we previously have not engaged with this investor base,” he said.
“But as we have grown the business and the transaction pipeline, we have fielded enquiries from super funds and Qantas Super has been the first mover,” he said.
Driving the investment in the agricultural sector, Mr Lenaghan said there was a desire among super funds to show leadership in impact investing and ESG.
“This is a responsible way to spend capital, plus there is the renewable energy optionality in [farm] land which is increasingly appealing to the domestic superannuation industry.”
On the returns front, agriculture offers a good hedge against inflation and resilience in investment portfolios because its returns have low correlation to other asset classes.
Farmland has delivered a 20-year compound annual growth rate of 8.5 per cent and water entitlements a 15-year CAGR of 6.7 per cent, Mr Lenaghan said.
Qantas Super’s investment will help transform underutilised land at Griffith into high-yielding horticultural crop, while at Sandmount Farms, where there is already an existing 445 ha almond orchard and a 71 ha mandarin orchard, a further 3770 hectares would need to be transformed into land suitable for horticulture.
Andrew Spence, chief investment officer at Qantas Super, said its investment in goFARM highlighted the “immense potential of the agricultural sector”.
“At Qantas Super, we’re committed to identifying investment opportunities that deliver strong financial returns to our members while aligning with our values of sustainability and responsible ownership,” Mr Spence said.
GoFARM has $1.1 billion of assets under management and is Australia’s largest producer of field tomatoes, and one of the largest producers of almonds, citrus, wine grapes, farm grains, oilseeds, pulses,
Last week, goFARM spent more than $40 million buying the 2360 ha Eurambeen Station and the 979 ha Grandview, both mixed-farming operations in Victoria’s Western District region where it will look to make productivity improvements.
Cheeky Farms includes around 37,000 mango trees across four properties.
