The Australian |
Super funds start to consider agriculture investments
The notorious reluctance of Australian superannuation funds to invest in agriculture because of perceptions it is too risky, volatile and low-return may be slowly changing, according to key farm and food industry players.
The Australian and Visy’s Global Food Forum dinner in Melbourne last week was told that with interest rates low and the sharemarket flat, local super fund managers were re-examining agriculture as a neglected sector that could offer brighter returns than elsewhere.
A pivotal turning point was the float of Australia’s biggest chicken meat producer, Inghams, in early November for $1.2 billion, with one of Australia’s biggest industry super funds, AustralianSuper, taking a $100 million stake with an option to buy another $50m parcel of shares.
Inghams chief executive Mick McMahon, a relative newcomer to the agricultural sector, said he had been delighted when AustralianSuper expressed its eagerness to be involved in the public float of the formerly family-owned company.
He said that unlike many other Australian institutional investors, AustralianSuper had understood the strong prospects of Inghams, which is enjoying boom sales as the price of rival red meat soars.
Inghams has revenue of $2.3bn, produces 40 per cent of Australia’s and NZ’s chicken meat, employs more than 8000 people at 340 poultry farms, processing plants and feed mills across Australia, and is one of the nation’s biggest stockfeed producers.
“It was an interesting process (selling the float). We got a better hearing the further we got away from Australia,” Mr McMahon said.
“I think because the chicken industry in Australia has traditionally been family-owned and held, there is not a great understanding here specially of how it works and how big it is.
“We ended up with very strong global investment but overall less of the (listing) money coming from Australian institutions than we had expected. Australian Super was the exception to the rule that super funds here are just not interested in agriculture.”
Darren Thomas, chief executive of major southern meat processor, exporter and expanding food giant, Thomas Foods International, said he was increasingly being approached by foreign pension funds and investors wanting to buy all or part of his business.
While he has not sold any of his family company, Mr Thomas said the lack of Australian super money looking to invest in agricultural investment was noticeable, although one or two funds were now having “a serious look”.
“Capital, whether foreign or Australian, hasn’t been interested in agriculture in the past, but some of the money available today is truly exciting,” Mr Thomas told the GFF dinner.
“But we (in Australian food and agriculture) only have three to five years to take advantage of this opportunity, because these investors are looking at Africa and South America too.”
Bell Potter stockbroker Hugh Robertson said it was about time Australian super funds followed the smart money — such as Gina Rinehart, Chris Corrigan and European pension funds like the Norway’s $1.2bn government oil boom pension fund — by buying into the Australian agricultural boom.