Packhorse Pastoral Company, the Australian cattle property investment firm with ambitions to raise as much as A$1.5 billion ($1.1 billion; €932 million), has opened a second round of fundraising targeting A$50 million.
The raise follows a first close on A$65 million in July, which was used to acquire the fund’s seed asset, the 8,360-ha aggregation Stuart’s Creek in Queensland.
New capital raised in the second round will fund the purchase of two further unidentified properties: one in the Maranoa region of Queensland, near Roma; and another in northern New South Wales. Both are of a similar size and profile to Stuart’s Creek, Packhorse Pastoral Company chair Tim Samway told Agri Investor.
Strong demand for Australian farmland has seen valuations hit record levels, but Samway said this was a positive sign for the sector and not a deterrent for an investor with a long-term view.
“We take a 20-year view on these things, we don’t have a trading mentality. So actually, we don’t think [farmland is] too expensive,” he said.
“Clearly we’re going to negotiate hard, we’re going to make sure it’s a fair transaction, and we’re not going to let money that we have in our pocket run to our heads by going to auctions and bidding up prices. But where we see value, we’re certainly keen to acquire because our model actually allows us to make quite good returns in the long run.
“Higher prices are a sign of the strength of the market and the strength of demand for the underlying product. That’s what it’s all about.”
Samway said the fundraising would continue to allow only Australian investors to participate, with international investors likely to be offered a chance to invest in separately managed accounts in future.
“Eventually we will look offshore, but it won’t be into the Packhorse Pastoral Company fund – it will be more of a separately managed account for offshore investors, who might like to come in and buy a whole property where we will manage it for them,” he said.
“Packhorse is all about Australian land for Australian investors and we’re very focused on that.”
The raise is likely to be filled by sophisticated wholesale investors rather than Australian institutional investors, Samway added, with those interested still requiring more time to complete investment processes.
“We will continue those conversations and they may come in at the appropriate time,” he said.
Packhorse’s stated targets will see it aim to raise A$300 million by the middle of 2022, deploying that initial raise by April 2023 before deploying up to A$500 million in total by mid-2025 following further raises.
Samway, who also chairs Australian equities fund manager Hyperion Asset Management, co-founded the firm with chief investment officer Tom Strachan, founder of labor hire company AWX Group. Packhorse also manages a portfolio of properties for Capital Airport Group, owned by Australian businessman Terry Snow and the operator of Canberra Airport.
The firm has also engaged Carbon Link to provide baseline soil carbon measurements for Stuart’s Creek, helping to sequester up to 2,800 tonnes of carbon per year in future, providing potential financial upside for the fund on top of its baseline returns.