Deals

Laguna Bay sells first asset from Agricultural Fund I for A$80m

The fund manager has sold Banongill Station, the first property it acquired for the fund in 2016, to a local farming consortium.

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Laguna Bay Pastoral Company has sold a property in Victoria for approximately A$80 million ($57 million; €48 million) in the first asset sale from Laguna Bay Agricultural Fund I.

The firm sold the 8,200-hectare Banongill Station, located in Victoria’s Western District close to Ballarat, to a local farming consortium, with 30,000 head of sheep and plant and equipment to be sold separately.

Laguna Bay Agricultural Fund I closed in 2016 on approximately A$300 million.

Banongill was the first acquisition the fund made in 2016 and saw Laguna Bay convert a significant area on the property from grazing to cropping, as well as upgrading pasture land and water infrastructure.

The vehicle is a 10-year closed-end fund with options for LPs to extend its life.

It has a broad mandate to invest in a diversified portfolio of assets including row crops, permanent crops, animal protein and water, and can use buy-and-lease, joint venture or own-and-operate models.

Laguna Bay CEO Tim McGavin told Agri Investor capital from the sale would be redeployed into existing and new assets after a portion of it is returned to investors.

“We’re long-term holders of assets, but we’re opportunistic – if we get a chance to redeploy capital and make more money elsewhere, we’ll take it. This was a really good offer and we have other opportunities to redeploy in assets for the fund,” he said.

“This farm has been a development project for us – we’ve converted a lot of livestock land into cropping land, allowing us to bank the uplift and prove our hypothesis.”

Laguna Bay retains a 3,300-ha cropping enterprise called Woorndoo in the region, located 50 km from Banongill.

The fund manager negotiated the sale directly with the local consortium, which is expected to settle post-harvest in Q1 2021. No regulatory approvals are required.

McGavin said the firm’s portfolio had proved resilient to the economic uncertainty caused by covid-19.

He told Agri Investor earlier this year that he expected the coronavirus crisis to lead to significant buying opportunities for farmland in Australia.

“We have some dry powder,” he said in March. “We’ve not always enjoyed trying to deploy capital over the last four years – land values have been high – so this could act as a big pressure valve release.”