Foreign investment and consolidation
The demand for food globally will drive investment in the industry, and in particular, foreign investors will see an opportunity to streamline and integrate value chains. Corporatisation and internationalisation of the Australian agribusiness sector will be a natural consequence of this rationalisation process. Recent acquisitions in Australia by Agrium and Cargill (from a foreign perspective) as well as Graincorp (domestic) are clear examples of this.
Foreign investment activity could be tempered by foreign exchange movements and limitations on foreign ownership of agribusiness assets and supply chains, but given the demographic changes afoot and the need to secure future food supplies, even with these restricting factors, we still see the volume of international transactions increasing in the foreseeable future.
Recently, we have been involved in a number of large-scale transactions including Terra Firma’s $400m acquisition of Consolidated Pastoral Company, Sumitomo’s acquisition of a 50% interest in Emerald Group Australia, and a sell-side role for CHAMP private equity in their divestment of United Malt Holdings to Graincorp.