Cargill fund ups BFB stake

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Financial Review 06 May, 2013

Cargill fund ups BFB stake

MATTHEW CRANSTON

A HEDGE fund run by an arm of the world's largest agriculture company, Cargill, has increased its stake in the unlisted agricultural company BFB Group, which has reported another solid full-year profit.

The fund, Black River Asset Management, increased its stake in the $186 million unlisted agricultural land and logistics company by more than $11 million, signalling that profitable Australian agriculture is still on the radar for the world's biggest fund ­managers.

BFB, which purchased the prized Billabong Station in the Eurongilly Valley, east of Wagga Wagga, NSW, last year, reported a $3.7 million profit for 2012.

The private company based in Temora, NSW, revved up its investment in agricultural property, plant and equipment during 2012 by $24 million.

Accounts released by the Australian Securities and Investments Commission show the company's revenues also grew to $46 million from $29.5 million over the 12-month period.

BFB chairman Andrew White declined to comment on the performance of the business or the intentions of its biggest shareholder.

However, the results show that despite a lot of negative sentiment in the farm sector, many operations are prospering and returning dividends to their investors. BFB paid a $9.31 franked ­dividend in October last year.

The dividend yield for Black River equated to almost 10 per cent.

A fortnight after receiving the ­dividend, Black River increased its shareholding in the company to 438,367 units, up from 357,977. Black River's total equity share in the company is valued at about $47.5 million.

The hedge fund has been adding to its portfolio of Australian property via separate transactions throughout the past 12 months.

In March this year, Black River purchased one of the largest farms within the sugar cane supply area of Mackay in north Queensland, for $10.5 million.

The property, Marwood Farm, was purchased in a joint venture with Mackay Sugar called Racecourse Projects. The farm has fully irrigated contiguous cane land, supplied by a 2100-megalitre licensed water supply.

Mackay Sugar invested $1 million into the joint venture and will hold a 15 per cent shareholding.

Mackay Sugar chief executive ­Quinton Hildebrand said Black River's co-investment was crucial for the ­longevity of cane farms in the area.

"The partnership with Black River will ensure that Mackay Sugar will retain influence on the long-term growth of this cane farming business," Mr Hildebrand said.

Original source: Financial Review
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