Australian Securities Exchange-listed property fund manager Primewest has acquired 100 percent of asset manager goFARM Asset Management for A$10 million ($6.9 million; €6.1 million).
Primewest announced the deal to shareholders today, replacing the board of goFARM Asset Management with Primewest representatives Jim Litis, David Schwartz and chair John Bond.
goFARM AM managing director Liam Lenaghan will remain with the business “to provide transitional services and support” for the next three months, the firm said. The transaction does not affect goFARM Australia or any other entity in the goFARM Group.
As part of the transaction, Primewest will take over management of the goFARM-managed Vitalharvest Freehold Trust, a listed vehicle that owns Australia’s largest aggregation of berry and citrus farms. It will rename it the Primewest Agri-Chain Fund once the transaction closes.
The trust’s portfolio is worth around A$275 million and is 100 percent leased to Costa Group, one of Australia’s largest listed agribusinesses and food producers. Its current market capitalization is around A$143 million.
Primewest has separately acquired an 11.8 percent interest in Vitalharvest Freehold Trust, making it the trust’s largest unitholder, and secured first refusal over a further 6.2 percent stake, subject to certain conditions.
The listed firm said that its capital will allow the trust to continue to invest in agricultural assets and other agribusinesses critical to the supply chain throughout Australia and New Zealand.
Primewest said it had funded the transaction from cash reserves and that the deal increases its assets under management by 7 percent to A$4.4 billion.
It said it had acquired goFARM Asset Management and the management rights to VFT because the agricultural sector provided “low correlation to market shocks” and that it was attractive because of tailwinds including “changing consumer preferences in emerging markets and global population growth.” It was also attracted to the sector’s “sticky tenant base,” it said.
In a statement, goFARM Australia managing director Lenaghan said: “As a high-growth business, there is always competition for the allocation of resources; time, focus and capital. The sale of goFARM Asset Management, a non-core business, allows the activation of a number of key strategic objectives for goFARM Australia. As such, the Bbard of goFARM Holdings views this as another very positive step forward for the goFARM Group.
“goFARM Holdings’ decision to sell goFARM Asset Management is by no means a reflection of its view on Vitalharvest. Indeed, we maintain the view that the Vitalharvest assets are investment-grade with extraordinarily favourable leases in place. The portfolio offers Primewest Group a terrific platform from which they can launch their agricultural asset management aspirations. We wish them, and the Vitalharvest unitholders every success.”
Primewest managing director David Schwartz said in a statement: “The real agricultural property and agri-logistics sector is an exciting sector with strong fundamentals. By expanding our investment opportunities to include the broader food supply chain, we believe we can attract a broader investor universe to support the fund’s growth.
“We aim to create Australasia’s leading pure-play agri-chain A-REIT which leverages Australia and New Zealand’s position as a leading global agricultural supplier.”
This story was updated on 22/6/20 with additional comment from goFARM’s Liam Lenaghan.