The Australian | 28 November 2011
by Damon Kitney
FARMING and water entitlements group PrimeAg is targeting $1 billion of rural assets under management around the country over the next two years following the establishment of its new agricultural fund.
PrimeAg chairman Roger Corbett said while it was talking to domestic and offshore investors about taking part in the fund to reach a target of $600 million in funds under management within six months, it had grander ambitions.
"If that agricultural fund succeeds, you will see then PrimeAg managing just on $1bn worth of rural assets across Australia and be able to either buy management or direct ownership," Mr Corbett said.
"Very clearly there are economies of scale, there is application of technology, there is application of best management practice and efficiencies of equipment as you use it," he said.
"The rewards of that effectively done over the cycle can be quite significant."
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PrimeAg launched a controversial $125m capital raising earlier this year that was matched by the Future Fund to create the PrimeAg Agricultural Fund. The Future Fund plans to invest a further $75m.
Asked about the $1bn target, PrimeAg chief executive Peter Corish said: "That is the objective. We have currently a $600m target certainly within the next 12 months. Therefore invested over the next two years -- perhaps even a shorter timeframe -- if you are able to secure a number of larger assets, that ($1bn) is a realistic target."
Mr Corish has previously said US fund Perry Capital, which acquired a 6.3 per cent stake in PrimeAg through the $125m raising, was helping introduce potential investors to PrimeAg.
PrimeAg plans to appoint an operations general manager to the fund to assist the evaluation of potential acquisitions.
The company angered a number of its larger shareholders by pushing ahead with the raising to underpin the agricultural fund.
They questioned the discount in the raising to PrimeAg's net tangible asset backing of $2 a share and why Perry Capital was given a preferential right to build a 10 per cent stake.
PrimeAg delivered its first profit for three years this year, reporting a bottom-line result of $7m compared with a $5.7m loss a year earlier.
Improved water supplies and production efficiencies have helped the company forecast a pre-tax profit of more than $20m for next year, before any benefits generated by its new agriculture fund.
The fund will generate management fees for PrimeAg, which Mr Corish has said will "enhance" shareholder earnings.
PrimeAg shares closed at $1.10 on Friday.
by Damon Kitney
FARMING and water entitlements group PrimeAg is targeting $1 billion of rural assets under management around the country over the next two years following the establishment of its new agricultural fund.
PrimeAg chairman Roger Corbett said while it was talking to domestic and offshore investors about taking part in the fund to reach a target of $600 million in funds under management within six months, it had grander ambitions.
"If that agricultural fund succeeds, you will see then PrimeAg managing just on $1bn worth of rural assets across Australia and be able to either buy management or direct ownership," Mr Corbett said.
"Very clearly there are economies of scale, there is application of technology, there is application of best management practice and efficiencies of equipment as you use it," he said.
"The rewards of that effectively done over the cycle can be quite significant."
Free trial
PrimeAg launched a controversial $125m capital raising earlier this year that was matched by the Future Fund to create the PrimeAg Agricultural Fund. The Future Fund plans to invest a further $75m.
Asked about the $1bn target, PrimeAg chief executive Peter Corish said: "That is the objective. We have currently a $600m target certainly within the next 12 months. Therefore invested over the next two years -- perhaps even a shorter timeframe -- if you are able to secure a number of larger assets, that ($1bn) is a realistic target."
Mr Corish has previously said US fund Perry Capital, which acquired a 6.3 per cent stake in PrimeAg through the $125m raising, was helping introduce potential investors to PrimeAg.
PrimeAg plans to appoint an operations general manager to the fund to assist the evaluation of potential acquisitions.
The company angered a number of its larger shareholders by pushing ahead with the raising to underpin the agricultural fund.
They questioned the discount in the raising to PrimeAg's net tangible asset backing of $2 a share and why Perry Capital was given a preferential right to build a 10 per cent stake.
PrimeAg delivered its first profit for three years this year, reporting a bottom-line result of $7m compared with a $5.7m loss a year earlier.
Improved water supplies and production efficiencies have helped the company forecast a pre-tax profit of more than $20m for next year, before any benefits generated by its new agriculture fund.
The fund will generate management fees for PrimeAg, which Mr Corish has said will "enhance" shareholder earnings.
PrimeAg shares closed at $1.10 on Friday.
