Beef Central | 2 September 2024Australian Food & Agriculture sells vast NSW portfolio in $780m deal
AFA operate the well-known Wanganella and Poll Boonoke Merino Studs. Photo: AFA
Privately-owned Australian Food & Agriculture Company has sold its 13 New South Wales farms spanning 225,405ha to NASDAQ-listed Agriculture & Natural Solutions Acquisition Corporation (ANSC) for $780 million.
In September, Bell Potter announced that AFA was being offloaded with hopes of achieving circa $700M.
Bell Group Holdings, owned by members of the Bell family and Alastair Provan, holds two-thirds of AFA, with the balance held by US hedge-fund manager Ray Dalio.
As a special-purpose acquisition company, ANSC closed its initial public offering in November with the aim of purchasing companies in the agriculture sector.
The combined ANSC and AFA entity is expected to be listed on the New York Stock Exchange under the new name Agriculture & Natural Solutions Company Limited, or NewCo.
In a statement lodged to the US Securities and Exchange Commission, ANSC said AFA offered an ideal mix of diversified holdings, a large portfolio of water entitlements, and the flexibility to change land-use and production focus.
It said also AFA had a strong financial record, returning an averaged 16 percent annually through EBITDA yield and asset value growth over the past 10 years.
The company foreshadowed the prospect of creating a new carbon-focused, renewable-energy or premium-brand income streams from the assets.
“[N]umerous growth opportunities exist at AFA to scale into an even larger agribusiness, start a portfolio of premium brands that leverage its storied history, create a global carbon-sequestration asset while taking advantage of Australia’s attractive carbon credit market, and build and own a substantial renewable power generation portfolio,” the statement said.
NewCo has indicated that it intends to invest circa US$40M over the next four years in capital expenditure on the portfolio.
This work would include optimising cotton production systems, expanding the livestock carrying capacity, commencing an environmental plantings carbon program and installing solar-powered water pumps.
ANSC chief executive officer Bert Glover said the organisation believed in agriculture as an ideal investment venture to “deliver nature and climate solutions”.
“ANSC is proud to enter into a business combination with AFA and looks to establish it as a leader in this regenerative transition not just in Australia, but across the world,” Mr Glover said.
ANSC chair and third-generation Montana rancher David Leuschen said Australia was renowned for its sustainable agricultural practices.
“We view Australia as a leader in the application of new techniques to meaningfully decarbonise agriculture, and we believe that AFA represents a once in a generation chance to combine with a major Australian agricultural company, operating three marquee aggregations including some of Australia’s most iconic properties,” Mr Leuschen said.
ANSC is backed by US asset-management firm Riverstone Investment Group and Impact Ag Partners, a specialist agricultural investment and management company.
Diversified holdings
After 30 years of investing in agriculture, AFA has become one of the largest diversified agricultural portfolios in NSW.
The jewels in the offering are trophy Merino studs Wanganella and Poll Boonoke, the famed birthplace of the modern Australian Merino sheep and at the forefront of the Australian wool industry for more than 150 years.
Australian Food & Agriculture has three operating hubs in in the Coonamble, Deniliquin and Hay districts.
According to its website, it produces 79,000 Merino ewes plus Merino wethers and prime lambs, and supplies elite Merino genetics from the Wanganella and Poll Boonoke studs.
Around 4000 Hereford breeding cows underpin the marketing of 2000 steers annually, with the potential to boost numbers through steer trading matched to available feed resources.
Irrigated cropping layouts over 11,000ha grow rice, cotton, winter cereals and forage.
The Deniliquin group of properties spans 122,935ha and comprise the original FS Falkiner & Sons property aggregation including Boonoke, Warriston, Peppinella, Wanganella, Zara, and Barratta.
This aggregation is primarily focussed on sheep and cattle breeding and grazing, with irrigated and dryland cropping as water availability permits.
The Coonamble properties Netherway and Wingadee jointly cover 44,846ha and are situated on the Castlereagh River to the north of Coonamble.
Netherway is fully developed for broadacre dryland cropping, while Wingadee is a grazing and cropping property.
AFA property, Boonoke, located north of Deniliquin.
The Hay properties cover 57,624ha and comprise Burrabogie, Mulberrygong, Kolora and Wahwoon, all on the Murrumbidgee River east of Hay.
The most recent acquisition in the Hay district, North Cobran, is located north-east of Hay.
Australian Food & Agriculture also owns the Conargo feedlot, 25km north of Deniliquin, approved to hold 5000 head of cattle and 15,000 sheep.
Operating since November 2017, the feeding company produced and purchased livestock to meet specific market opportunities as well as custom-feeding cattle for a number of clients.
In conjunction with extensive grazing activities, irrigated crops including rice, cotton, and winter cereals are grown using bore water and 54,693ML of water entitlements from the Murrumbidgee and Murray river systems.
Succession planning
The holdings were previously offered to the market in 2020 for $330M.
Bell Financial Group founder Colin Bell at the time told The Australian newspaper the holdings were being sold because the Bell brothers, including Andrew and Lewis from the Bell Financial group, Bell managing director Mr Provan and Mr Dalio were older than 70.
Mr Bell said the five part-owners were selling all of the company or a share of it, but the properties would not be split up and sold separately.
“We are being selective about who we approach – they have to be high-value individuals or companies both here or overseas with an interest in Australian agriculture – and what we are selling here is a profitable business, not just individual farms.”
Colin Bell died in 2022.
The transaction remains subject to the approval of ANSC’s shareholders and the Foreign Investment Review Board.
Upon closing, the board of NewCo will be comprised of seven directors including two designated by current AFA shareholders who will roll a portion of their ownership into NewCo, Mr Leuschen, Mr Glover and three independent directors.
