Australian Financial Review | 17 March 2024
Canadians pay $180m to take control of Queensland egg farmer
by Larry Schlesinger
Canada’s PSP Investments, the largest institutional investor in Australian agriculture, has made its maiden investment in the poultry sector after spending about $180 million to acquire majority ownership of egg farm operator Ellerslie Free Range Farms.
While both PSP and Ellerslie declined to disclose the size of the investment or what it cost, corporate filings show PSP was issued 180.5 million shares at $1 each at the end of February, giving it a 60 per cent stake in one of the country’s biggest egg producers.
PSP is the world’s fourth-largest pension investment manager with $273 billion of assets managed on behalf of the pension plans of the Canadian Public Service, the Canadian Armed Forces, the Royal Canadian Mounted Police and the Reserve Force.
Its natural resources division manages $14 billion of agriculture and forestry assets of which a big chunk – over $6 billion – are investments in Australian farmland spanning nuts, vineyards, cropping aggregations and livestock holdings,
Last year PSP struck one of the largest deals yet in Australia’s burgeoning macadamia industry after paying more than $100 million to buy most of the assets of family-owned, Bundaberg-based grower and producer Macadamias Australia.
In 2022, PSP acquired 35 vineyards valued at $46 million from wine group Casella. It paid more than $60 million in the same year for the Costa family’s Yarrabee Park grain growing aggregation in the NSW Riverina, in a deal involving Daybreak Cropping, its joint venture with local agricultural specialist Warakirri Asset Management.
PSP’s investment in the poultry sector will give it a decent slice of the $1.3 billion egg production market, where caged egg production is being phased out as the sector moves to be entirely free range by 2036.
Between now and the 2029 financial year, the real value of Australian egg production is expected to fall slightly to $1.2 billion as lower real prices offset higher production costs, according to the latest forecasts from the Australian Bureau of Agricultural and Resource Economics and Sciences.
‘Best-in-class’ operator
Marc Drouin, global head of natural resources at PSP Investments, said its investment in Ellerslie aligned with its strategy of investing alongside “best-in-class, local operators who share our values, long-term horizon and commitment to sustainable farming”.
“In many cases, this results in us investing alongside farming families who have cared for their land and animals for generations,” he said.
Ellerslie Free Range Farms was founded in the 1960s by Fiji-born Doug Hall on a property in Queensland’s Darling Downs region near Toowoomba.
Mr Hall started out with just one farm, but over the decades and with the involvement of his sons Simon and David, expanded the business into one of Australia’s biggest egg producers.
The Hall brothers – who retain a 40 per cent interest in Ellerslie through DHP Consolidated – were worth $137 million in 2014, according to the Sunday Mail Queensland Top 150 Rich List.
Ellerslie also owns a 50 per cent interest in Sunny Queen, one of Australia’s largest egg processors and distributors, and the Yallamundi Farm organic eggs brand.
The Foreign Investment Review Board-approved transaction will not result in any changes to the Ellerslie business, its 400-strong workforce or relationships with customers and suppliers, the egg producer said.
Accounts filed with the corporate regulator for the year to June 2023, show Ellerslie generated revenue of $142.3 million, up 33 per cent on the prior financial year, while pre-tax profits increased more than threefold to $5.4 million.
Ellerslie chief executive Greg Quinn said PSP Investments’ global scale would help the company accelerate its plans to significantly increase cage-free production in the coming years.
“I look forward to working with PSP Investments and I know that we are absolutely like-minded in our shared commitment to the highest standards of quality, sustainability and animal welfare,” he said.
