Sundrop gets $100m injection from KKR to grow tomatoes in SA desert

The Age | 4 December 2014

Sundrop gets $100m injection from KKR to grow tomatoes in SA desert

by Simon Evans
Sundrop Farms has received a capital injection from private equity firm Kohlberg Kravis Roberts to aggressively expand its operations, which grow tomatoes on desert land north of Port Augusta in South Australia using solar thermal energy and desalination.

KKR is understood to have provided around $100 million in extra funding to Sundrop Farms, with a new 10-year contract with supermarket giant Coles to buy tomatoes cementing the investment.

Combined with $6 million in funds being tipped in by the South Australian Government announced by Premier Jay Weatherill on Thursday, Sundrop Farms is expanding with up to 300 jobs being created.

Sundrop Farms grows tomatoes and capsicums using solar thermal technology to take the salt out of sea weater, and for heating and cooling greenhouses.

The company's majority owner is chief executive Philipp Saumweber, who is based on the Isle of Man in the United Kingdom. The expanded output means Sundrop Farms will be producing up to 15,000 tonnes of tomatoes, capsicums and other vegetables each year after 2016.

Leighton Holdings will also be a beneficiary, because its John Holland subsidiary has been awarded a contract worth $150 million to design and construct a 20-hectare greenhouse facility. The work will start now and is scheduled for completion in late 2016.

Mr Weatherill said the State Government had provided $6 million from a Regional Development Fund towards the expansion.

He said it would create 100 jobs during construction and about 200 when the expanded operation was fully up and running.

Mr Weatherill said a contract with Coles to purchase Sundrop Farms' truss tomatoes for the next 10 years and sell them across its national network was vital in securing financing.

The Sundrop Farms operations will stretch across 20 hectares once the expansion is complete. The company has been successfully trialling its technology on a smaller scale.

"The project is the first in SA to integrate, at a commercial scale, leading technologies across solar thermal energy, solar seawater desalination and freshwater neutrality across 20 hectares of energy efficient greenhouses," Mr Weatherill said.

The Sundrop Farms operations are about 300 kilometres north of Adelaide, near Port Augusta. The dry climate and the close proximity of the sea waters of the Upper Spencer Gulf are viewed as ideal for the use of the solar thermal technology. It works at its most efficient in flat, arid regions that are close to the ocean and in an area of low humidity.

Leighton chief executive Marcelino Fernandez Verdes said his company had the multi-disciplinary skills for the "unique requirements" of the arid environment project.

Coles, owned by Wesfarmers since a $19 billion takeover in 2007, was ironically an initial takeover target of KKR in 2006 which ultimately kicked off a bidding war eventually won by Wesfarmers.

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