Proterra’s Black River Fund 2 to wind down with Corinella divestment

Proterra Investment Partners said it had seen “unprecedented” levels of interest in its Corinella portfolio of Australian farms, the first stage in the divestment of assets from Black River Agriculture Fund 2.

In an update, the firm said it had received nearly 260 enquiries into the portfolio, which comprises 49 farms arranged into four aggregations across Victoria and South Australia. This has resulted in 63 formal expressions of interest, which are now being considered before a shortlist of potential buyers will be taken forward to a second round.

Shares in Corinella Farms, the operating company behind the portfolio, are owned by Black River Agriculture Fund 2, as well as co-investors via Black River Agriculture Co-Investment Fund A, according to Australian Securities and Investments Commission company ownership documents. Proterra Investment Partners declined to comment on specific named funds and said it could not discuss which fund owns the assets.

Black River Agriculture Fund 2 was one of the funds spun out from Black River Asset Management, a wholly owned, independently managed subsidiary of agribusiness giant Cargill, on January 1, 2016. Proterra Investment Partners was the asset manager created to take on management of those funds.

The Corinella portfolio covers more than 22,500 ha, more than 20,000 ha of which is arable. It includes grain growing operations in western Victoria and the Wimmera region, and horticulture, cereals and lamb production assets in South Australia. One of the properties in Naracoorte, South Australia, is irrigated using water rights of 5,778 ML.

Proterra Investment Partners managing director and Australia portfolio manager Becs Willson told Agri Investor the assets had received more than 100 physical inspections to date, despite no international travel to Australia and interstate border closures within the country.

“Certainly in my time in this business, I’ve never seen anything like that,” she said. “For an aggregation of farms to get 100 different parties across either one farm or a group of farms is just unprecedented.”

Willson said that, following the shortlisting of buyers in round two, Proterra expects to wrap up the sale process within four to six weeks before a handover in the new year ahead of the 2022 winter crop.

“We’ve had interest from lots of family farmers and neighbors to these properties, as well as groups of farmers banding together to form syndicates, local institutional investors, and some foreign institutional investors too,” she said.

Willson said Proterra has been developing and investing in the assets over several years, but that the end of the fund’s life, combined with strong farmland valuations, meant that it made sense to divest. In addition, the firm’s operating partner Sue Watson is leaving to pursue a personal opportunity, thereby contributing to the decision to divest rather than find a replacement.

“Integrating a new operating partner and management team into the business when the end of the fund’s life is approaching at the same time is just not optimal timing – and against the background of increasing land values and the commodity bull market, the stage is set for a strong exit for our investors,” Willson said.

“Also, because this business has been led by a female, with more than 50 percent female representation in our harvest crew last year, it has been a great showcase for our ability to bring diversity into the operation and pursue some other major ESG initiatives.”

Willson said the fund still holds two investments in Queensland and one in Tasmania and that the move to sell Corinella did not represent a shift in strategy for Proterra in Australia.

“We definitely want to continue the strategy in Australia with investor support,” she said.

In 2019, Proterra completed a large divestment with the sale of its stake in major New South Wales cropping enterprise BFB to Canadian pension PSP Investments for several hundred million Australian dollars. The BFB stake was held by Black River Agriculture Fund I.