News & Analysis

Shanghai Pengxin, Australian firm team up for S Kidman bid

The cattle station portfolio is now being sold without the contentious Anna Creek property, half of which is on a weapons range.

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Listed agricultural investment firm Australian Rural Capital (ARC) will bid alongside Shanghai Pengxin for S Kidman’s cattle station portfolio, according to Australian media.

Pengxin is thought to have bid A$370 million for the cattle stations last year, but the Foreign Investment Review Board (FIRB) blocked any sale to foreign investors if the properties included Anna Creek, half of which is located on a weapons testing range. S Kidman is now selling the stations without Anna Creek.

Rival bidder Hunan Dakang was also close to finding an Australian partner in December, according to the Australian. By joining with local investors, bids from Chinese buyers will be treated favourably by the FIRB and Australian public, commentators said.

Australian-owned online property investment platform DomaCom and supply-chain company Linfox are also interested in the lands.

Foreign land ownership can be a contentious issue in Australia: Bega Cheese executive chairman Barry Irvin said the FIRB is being used as a “xenophobic weapon” against Chinese buyers. Terra Firma portfolio company Consolidated Pastoral Company, which is Australia’s largest privately owned cattle business, also weighed in on Monday, saying the investment rules would put off Chinese investors.

The threshold for Chinese investors’ deals to go in front of the FIRB is A$15 million, while US buyers, for example, only need land investments over A$1.09 billion to be approved.

In December, Australia’s agriculture minister Barnaby Joyce said he would prefer larger properties, such as Van Diemen’s Land, to be in the hands of Australians as he continues to urge his country’s superannuation funds to invest more in local agriculture. The Tasmanian dairy and land tract was sold to privately owned Chinese company Moon Lake Investments for A$280 million last month, the first foreign sale to be approved by the FIRB under new tax rules.

ARC invests in agribusiness and what it calls agristructure (agricultural infrastructure) assets and companies, focusing on the post-farm gate segments of the agri supply chain.