Weekly Agribusiness News Recap

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By Georgia Devenish - Agricultural Research Analyst at JLL

Tenacious Ventures, an agrifood tech venture capital firm, has been the recipient of $16 million of new investment. The Federal Government's Clean Energy Finance Corporation and Atlassian Co-CEO Mike Cannon-Brookes via his investment fund, Grok Ventures, have each committed $8 million. Tenacious Ventures is seeking to raise $30 million and plans to invest in early-stage startups focused on the agricultural supply chain.

Mr Cannon-Brookes has also been in the media this week due to his investment - this time alongside Fortescue Metals Group Chairman, Andrew Forrest - in the ambitious project to export solar power from the Northern Territory to Singapore. The project involves what will be the world's largest solar farm and a 4,500 kilometer high voltage direct current transmission network. Known as the Australia-Singapore Power Link (ASPL), 3,000 kilometres of this network will be an undersea cable linking the power source to customers in Singapore. Developer, Sun Cable, announced on Wednesday first-round capital raising for the $25 billion project had closed oversubscribed allowing the company to undertake development work for the ASPL. It is anticipated that the project will reach financial close by late 2023 with commercial operations targeted to begin in 2027.

Agriculture investment firm, AAM Investment Group, has announced the establishment of the AAM Diversified Agriculture Fund. The group seeks to initially raise $60 million to acquire a portfolio of large-scale poultry infrastructure assets, and mixed livestock and cropping assets. AAM Investment Group Managing Director, Garry Edwards, said, "The upside of having a wider array of assets spread across different geographies and commodities is that it naturally gives us risk protection against things like drought." Edwards also mentioned the fund would acquire water licences and develop water infrastructure in order to mitigate exposure to climatic risks. Open to sophisticated, institutional, wholesale and professional investors, the AAM Diversified Agriculture Fund will target a base case distribution yield of 7 to 8 percent per annum and base case total return of over 12 percent per annum.

Kilter Rural, a specialist manager of Australian farmland, water and ecosystem assets, was acknowledged at the Impact Investment Summit Asia Pacific 2019 Awards Evening in Sydney last week, earning the title of 'Impact Asset Manager of the Year'. The awards recognise outstanding activity and individuals in the Australian impact investing ecosystem. Upon receiving the award, CEO Cullen Gunn said, "We consider the scale and extent of issues facing Australia's, and the world's, natural assets as a fundamental opportunity. The scope for new large-scale systems of capital allocation in landscape regeneration and ecosystem repair can deliver products and services that drive profitability and establish a long-term competitive position."

The Australian Competition & Consumer Commission (ACCC) announced late last week that it would not oppose ANZ Terminals Pty Ltd's proposed acquisition of GrainCorp Bulk Liquid Terminals. The review began in May 2019 following GrainCorp's announcement that it would sell Bulk Liquid Terminals to ANZ Terminals for $350 million in March 2019. The ACCC's decision not to oppose the acquisition follows ANZ Terminals providing a court-enforceable undertaking to divest its Osborne facility in South Australia to a purchaser to be approved by the ACCC. In addition, GrainCorp's bulk liquid facility at Port Kembla has been excluded from the transaction and will remain part of GrainCorp. Given these exclusions, GrainCorp announced it would drop its sale price to $332 million. The deal still requires approval by the Foreign Investment Review Board.

Treasurer, Josh Frydenberg, has given his approval to the China Mengniu Dairy Company Limited acquisition of infant formula manufacturer, Bellamy's Organic should Bellamy's Organic shareholders agree. But there are conditions. Stipulations include a majority of Bellamy's board needs to be Australian resident citizens, Bellamy's headquarters must remain in Australia for 10 years and an investment of at least $12 million needs to be made to establish or improve infant formula processing facilities in Victoria. In the media release from the Treasurer, it was stated, "The conditional approval demonstrates our foreign investment rules can facilitate such an acquisition while giving assurance to the community that decisions are being made in a way which ensures that Australia's national interest is protected."

Drought related costs equating to $36 million have weighed heavily on Australian Agricultural Company's (AACo) balance sheet but strong growth in Wagyu meat sales has padded the blow. AACo have posted an underlying operating profit of $9.4 million for the first six months of 2019/20, but a $14.1 million statutory net loss. Looking at the positives, this is approximately an 80 percent improvement on the $68.3 million statutory loss reported at the same time last year. Furthermore, the company achieved its strongest half year of Wagyu meat sales figures to date, up 9.5 percent to $102.8 million.

Jack Burton has resigned as Yeeda Pastoral Co's Managing Director and CEO and has sold his family's interest in the business and the Kimberley Meat Co processing facility which he co-developed near Broome. Yeeda's three other shareholders, including chairman and co-founder, Mervyn Key, have acquired Mr Burton's stake in the business. The Burton family will retain ownership of 'Kilto Station', which Yeeda Pastoral Co will continue to lease until December 2020.

The decision will allow Mr Burton to focus on a major new cattle business in northern Australia. In April, a Memorandum of Understanding was signed by Northern Pastoral Management (NPM) (established by Jack and Vicki Burton) and indigenous-owned MG Corporation which will see parcels of the Miriuwung Gajerrong land opened up to cattle production and irrigation. The project will cover the Miriuwung Gajerrong native title claim area in the east Kimberley of Western Australia bordering the Northern Territory.

The CSIRO Boorowa Agriculture Research Station opened this month following four years of planning and development, and an $11.5 million investment. This new site on the south-west slopes of New South Wales replaces the retired Ginninderra Experimental Station near Canberra which had been in operation since 1958. CSIRO Director for Agriculture and Food, Dr Michiel van Lookeren Campagne, said, "Here at Boorowa, we'll be trialling new varieties of wheat, canola, legumes and pastures that can withstand warmer and drier conditions, such as those predicted for the future." CSIRO Deputy Director for Agriculture and Food, Dr Michael Robertson, outlined the features of the station saying it was fully digitally-enabled, equipped with 100 temperature and humidity probes, 72 soil moisture probes, and six weather stations to monitor experiments in crop science, agronomy and farming systems across its 290 hectares.