Our CEO, Sean Cortis, was recently featured in the Australian Financial Review to comment on the latest capital raise for Stone Axe Pastoral and his views on rising agricultural investment opportunities.
Article by Matthew Cranston, appeared in the AFR 21/03/16
“Stone Axe Pastoral Company is looking to raise between $15 million and $20 million for the expansion of its Wagyu business in Kojonup, Western Australia.
The company is the latest of a spate of offerings in the agricultural sector for investors looking to get a foothold in soft commodities and capital appreciation in just about the last area of the property market that hasn’t seen significant price uplift.
Last month cattleman Charlie Mort had investment bank Moelis raise money for his expanding cattle station and feedlot business which he plans to list on the Australian Securities Exchange, with a value of $175 million.
The latest offering from Stone Axe includes the expansion of its Wagyu cattle herd for a feedlot of 20,000 The company has a 3080 hectare property where production takes place. It is looking to make further farmland acquisitions and leases midway through next year. Stone Axe managing director Andrew Rado will be hosting investor presentations in Sydney next month.
Chief executive of advisory service Chapman Eastway Sean Cortis said his group had seen an increase in the number of investment offerings in the agricultural sector.
“We are seeing more of these opportunities come through and we will definitely see an increase,” Mr Cortis said, “We have evidence of a growing pipeline and there are more people looking to promote these opportunities and it’s right across the sector.”
Mr Cortis said that private family office style investors were particularly interested in agribusiness as an alternative asset class.
“Our clients do see an opportunity in capital growth as well but the smart money is for the vertical supply chain investments – that’s where you can see 20 plus internal rates of return.”
There are dangers however.
Major agricultural land offerings such as Aerum which was looking to raise $740 million of debt and equity to buy at least 50 dairy farms in Victoria, have since failed to get off the ground.
Newly listed companies such as Australian Dairy Farms Group and Wellard’s have seen their share prices tank about 40 per cent this year in a broadly depressed equities market.
Other private trusts are also out doing deals in in the poultry sector with Sentinel Property Group snapping up a major chicken farm in south east Queensland for $23 million earlier this month in a deal negotiated by CBRE’s Ed Bull. Sentinel is seeking to make further agricultural type investments.”