The sovereign wealth fund, also a service provider for other institutions, said in 2015 that it would increase investment targeting the Asia-Pacific market, looking at agriculture and beef in particular.
The rumoured sale could represent the Australian superannuation industry’s biggest cattle play in years. NAPCO is one of Australia’s most significant cattle companies, managing 5.8 million hectares across Queensland and the Northern Territory as well as running an in-house integrated supply chain. The company exports chilled beef as well as selling to the domestic market. Reported by the Australian Financial Review to be in due diligence stages, a transaction for the company could amount to A$400 million, about A$30 million over S Kidman’s sale price.
The QIC has been actively pursuing opportunities in agriculture and beef since at least the end of last year, when Queensland treasurer Curtis Pitt announced: “The QIC agribusiness strategy is about growing the beef industry to meet new Asian demand. […] Meat exports are one of the Queensland economy’s great strengths.”
Minister for agriculture Bill Byrne said cattle investments would help the local economy as well as generating returns. He said the strategy” would connect farmers to the end users by investing in the whole supply chain to improve integration and coordination,” and that it was “an opportunity that can accommodate hundreds of millions of dollars in new investment.”
QIC’s 2015 annual report said the institution would increase its Asia-Pacific investment footprint, “especially where there are ‘win-win’ opportunities with a focus on sectors where Australia enjoys natural advantages.
“Agribusiness is one such sector and [the Global Private Equity team] is pursuing an operational, integrated approach with scale and an attractive pipeline of opportunities,” the report continued.
NAPCO, like many beef producers in Australia, has built itself up in recent years around an Asia-driven export market. In 2010 the company devalued its freehold land portfolio by about A$10 million when a live export ban on cattle to Indonesia came into force. However, new free trade deals with Asian economies have led to a boom in Australia’s red meat export industry. Australia sent 1.285 million tonnes of beef abroad last year, slightly more than in 2014. Last year NAPCO posted profits of A$42 million.
In March, Australia’s agriculture minister Barnaby Joyce called on his country’s A$1.8 trillion ($1.3 trillion; €1.2 trillion) pension fund industry to increase investment into Australian agriculture as foreign investors’ interest grows. If the deal is completed, it could mark a sea change. The country’s pension industry has been criticised in the past for its lack of interest in Australian agriculture as investors from China to the US cash in on the sector.