Australian alternative investment manager Blue Sky is launching a co-investment fund targeting assets along the grain supply chain.
The closed-ended investment vehicle will focus exclusively on assets supplying grain to or held within organic grains processing company and exporter, Kialla Pure Foods in Queensland.
Assets on the production side include water entitlements, irrigation infrastructure and irrigated farmland to produce organic grain. Further up the supply chain, there will be exposure to grain storage and handling facilities, as well as provisions to process and mill grains for organic foods and fodder, according to a statement from Blue Sky. The investment will also include ownership of industrial land, which it plans to expand over time.
All the assets, including land and irrigation infrastructure, will be converted to certified organic production, and will be managed by Kialla.
“Ownership of the entire agribusiness chain provides valuable synergies, consistency of earnings and cashflow, and natural hedges against asset value and commodity price fluctuations inherent with agriculture,” Blue Sky added.
“Integration with the target farm assets will create a base load of volume through the milling business via an offtake agreement,” said a statement from Blue Sky.
The manager said it expects “asset values will be re-rated to reflect superior production economics of the organic crop (in comparison to existing farming systems) over the life of the [fund].”
Last year, Kialla cut its budget by 30 percent, partly because it could not source enough grain to supply demand, reported local paper Queensland Country Life.
Blue Sky will contribute financial, water market and agribusiness investment knowledge, the manager said. Details of the fund’s lifespan or size were not disclosed.