First State Super-backed A$150m fund chooses agri as first investment

A public-private investment fund meant to channel pension capital towards strategic sectors of the Australian economy has picked an agricultural venture as its first deal.

GO NSW Equity Fund, a A$150 million ($117 million; €95 million) vehicle backed by First State Super and the government of New South Wales, will take a A$10 million in Stone Axe Pastoral, a wagyu beef agribusiness in Ebor, in the state’s north-east.

First State Super, which pledged A$100 million to the vehicle when it was created in October October, will commit two-thirds of the money. The NSW government, having invested A$50 million to GO NSW, will provide the balance.

ROC Partners, a Sydney-based private equity firm that spun out from Macquarie Group in 2014, took a majority stake in the business in May 2015. In November, the firm was reportedly seeking A$70 million in capital, via the sale of agricultural and water assets run by PwC, to create a 30,000-head beef abattoir and 20,000-head feedlot.

“Any returns or profits generated by our equity stake will go back into the fund”
John Barilaro, NSW Deputy Premier

Deputy Premier and Minister for Small Business and Regional NSW John Barilaro said the GO NSW equity injection would help Stone Axe breed “the largest full-blood Wagyu cattle herd outside of Japan.” The company’s chief executive, Scott Richardson, noted the investment was part of an effort to bring its full-blood wagyu headcount to 10,000 over the next three years, from 1,000 currently.

Upon GO NSW’s creation, ROC was hired by the NSW government and First State Super to support the origination, assessment and execution of investments for the fund.

Uber beef

GO NSW primarily targets companies valued at between $20 million and $50 million that are looking for capital to help them expand. At least 20 percent of its dry powder must go to regional businesses.

“This isn’t a loan or a grant program, but the government actually investing in businesses, by buying a stake in them. Any returns or profits generated by our equity stake will go back into the fund to help more businesses,” Barilaro said last October.

NSW Finance Minister Victor Dominello added the fund should provide a better return for state taxpayers than “handouts”. He hoped NSW would host more ‘unicorns’ in the future.

It is not clear what returns First State Super, a not-for-profit A$64 billion pension, is expecting from the fund. The institution could not be reached for comment before publication.

“Investing in businesses will always carry a level of risk, but we’re prepared to take that risk, because with risk comes reward, and it’s how you unveil the next Uber, Google or Atlassian,” Barilaro said.