Macquarie Infrastructure and Real Assets’ bid for the ASX-listed Vitalharvest Freehold Trust submitted last year was recommended to shareholders (despite concerns) and it looked as if the transaction was likely to proceed.
But at the end of February, Roc Partners entered the fray with a surprise bid of A$1.08 ($0.83; €0.70) per unit for Vitalharvest, beating MIRA’s bid of A$1.00. The Sydney-based private equity firm also offered to buy the underlying assets owned by Vitalharvest should its takeover of the trust itself not be successful, as MIRA had done.
The most recent update came on March 5 when Perpetual, the responsible entity for Vitalharvest, said the Roc Partners bid “would be reasonably likely” to result in a superior proposal. The firm still recommended the MIRA bid, though, because Roc’s was non-binding and subject to uncertainty. A shareholder vote is slated to take place sometime in April.
Equity funding for Roc’s bid will come from undrawn commitments from its existing investors, as well as from the Roc Agri+ Infrastructure Fund, the firm said. This is the firm’s inaugural agriculture-focused vehicle that Agri Investor exclusively reported on in February, which is nearing a close in the first half of this year. The vehicle has a target of A$200 million and a hard-cap of A$300 million.
If Roc can pull off the Vitalharvest acquisition, a company that has leased its assets to blue-chip agribusiness Costa Group, it would be a sign of intent for the fund.
The fact that Vitalharvest has drawn such heated interest in the last 12 months is indicative of the appetite for high-quality agriculture assets, backed by long-term counterparties.
Real estate fund manager Primewest made a splash when it acquired the management rights to Vitalharvest in 2020, and also became the trust’s biggest shareholder. While it has made other acquisitions in the sector, the Vitalharvest deal was a sign that it was taking agriculture seriously.
Yet it was persuaded to back the MIRA bid in November 2020, less than six months after taking over the trust’s management.
Now, with Roc Partners on the scene, that makes it three fund managers (four if you count previous manager goFARM) either owning or chasing the same collection of assets in a 12-month period.
“There are deep pools of capital in the market right now,” a market source involved in capital raisings and other advisory work for agribusinesses told Agri Investor.
“The banks are also very active and pricing is quite favorable in the current market. Those fundamentals, coupled with favorable exchange rates and commodity prices, are going to fuel a lot of activity in the space.”
The competition for Vitalharvest is a sign of that pent-up demand, especially as markets begin to normalize again after the disruption of 2020.