Australians to get chance at S.Kidman & Co with new $370m deal

Australian Rural Capital chief executive James Jackson says Australians still have a chance to own S. Kidman & Co.
Australian Financial Review | 20 April 2016
Australians to get chance at S.Kidman & Co with new $370m deal
by Matthew Cranston
Australians will get a chance to own a 20 per cent stake in the country's largest landholder, S. Kidman & Co, alongside large Chinese investors, after a deal was struck this week to buy the iconic cattle business for more than $370 million.
Australian Rural Capital, a small investment manager listed on the Australian Securities Exchange, will seek to raise $80 million to set up a separate new company that will own the 20 per cent Kidman stake and whose shares will trade on the ASX.
"This is an opportunity for Australians to invest in the Kidman business," Australian Rural Capital's executive chairman James Jackson said. "We won't be seeking any foreign investors for this new company." 
The ambitious plan to create an Australian-owned partner for the Chinese investor Dakang's massive new cattle station business was seen by some as an attempt to help appease demands from the Foreign Investment Review Board, as well as quell some of the political backlash from voters who are against foreign investment. 
Federal Treasurer Scott Morrison said on Wednesday he had commissioned an independent, external review of the "complex" $370.7 million sale of Kidman as a way to help make his decision on whether the deal is in the national interest. The controversial deal is still subject to foreign investment approval from the Treasurer.
"I will not be rushed into this. It's a very big transaction," Mr Morrison said.
He said he had made an interim order to prevent the sale occurring for 90 days while he considered whether the deal should be approved.
Decision after election
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His move means the highly political decision to approve or refuse the deal will not have to be made until July 18, well after the federal election on July 2.
However, some are not convinced of the structure of the new deal with Australian Rural Capital.
Arthur Naoumidis, chief executive of the property crowdfunder DomaCom, which had 4500 investors wanting to fund the S. Kidman & Co pastoral holding, said the company's board should still be considering other offers. 
"I really don't think this deal they have done is any different to the one they did last year, in that it still requires FIRB approval," Mr Naoumidis said.
"Their new Australian manager is really just an ASX shell, so I think that is just window dressing."
Agriculture Minister Barnaby Joyce said his preference was for Australians to own the country's agricultural assets.
"We have to prove that [the deal] is not to the detriment of the Australian people," Mr Joyce said. 
Selling to Chinese 'madness'
Others against the sale include businessman Dick Smith, who earlier in 2016 said selling agricultural land to the Chinese in any way was "madness".
Australian Rural Capital's Mr Jackson said the deal had been clearly structured to ensure that Australians could place an investment in the Kidman business. However, the plan to set up the new company would proceed only if the Kidman purchase was approved by FIRB. 
Advisory group Chapman Eastway chief executive Sean Cortis said to create a joint venture with the Chinese and Australian-based manager was a smart move for easing the passage through FIRB.
"When we deal with Chinese companies and Chinese state-owned enterprises they all prefer to do joint ventures because it can improve governance and it can actually help profitability," Mr Cortis said.
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Original source: AFR

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