PSP internalizes management of Daybreak Cropping from Warakirri

Canadian pension PSP Investments has announced that it will consolidate the management of its two majority-owned Australian cropping businesses, BFB and Daybreak Cropping, under the leadership of BFB’s management team.

The move sees PSP effectively internalize its Australian cropping investments, as Warakirri Asset Management will no longer manage the assets held in the Daybreak Cropping portfolio following a transition period of several months. The two investors established Daybreak Cropping together in 2016.

The combined operation will create “one of the leading cereal cropping operations in Australia”, PSP said in a statement, owning and operating 41 farms across 10 aggregations in four states.

PSP said the tie-up would help drive operational efficiencies “through continuous improvements in on-farm practices, with a particular emphasis on sustainability.” The transition from Warakirri’s management is not expected to affect farm-level employees, it added.

PSP purchased a majority stake in New South Wales cropping enterprise BFB from Proterra Investment Partners in January 2019.

At the time of the purchase, BFB owned a cropping portfolio comprising 48,753 hectares in the Riverina region of NSW, as well as a piggery and a significant logistics and grain storage and handling operation. The grain storage operation is run as a joint venture with US agricultural giant Cargill and can hold more than 400,000 tonnes of grain in addition to BFB’s on-site storage facilities.

The C$204.5 billion ($161 billion; €150 billion) pension’s investment in Aurora Dairies, a platform it established in early 2019 following the acquisitions of 11 dairy farms from Warakirri Dairies, which operates 33 pasture-based dairy farms, will continue to be managed by Warakirri.

Marc Drouin, senior managing director, real assets, and global head of natural resources investment at PSP Investments, described the move as an “important development” and a “natural evolution of our portfolio of broadacre farming assets.”

“The combination of the businesses will allow us to simplify operating structures and capture the benefits from operational scale, while driving growth, performance and results. We would like to thank our operating partners Warakirri Asset Management for helping Daybreak Cropping to become a world-class sustainable farming operation,” he said.

Warakirri Asset Management managing director Jim McKay said in a statement: “We’re extremely proud of our role in contributing to the establishment of a significant national portfolio of investment-grade broadacre cropping assets with a culture that prioritizes the safety and wellbeing of the people, while executing at scale sustainably and in line with global best practices. We will work closely with PSP Investments and BFB to ensure a smooth transition of operations and we’re confident that our talented teams will continue to deliver great outcomes.”