PSP Investments JV acquires Auscott

PSP has made another significant investment in Australian agriculture through its purchase of Auscott, adding to its acquisitions of BFB and Webster in 2019.

A joint venture backed by Canada’s Public Sector Pension Investment Board has agreed a deal to acquire 100 percent of Auscott, one of Australia’s oldest and largest vertically integrated cotton producers.

US-based JG Boswell Company this week announced it had sold Auscott to Australian Food and Fibre, a JV between PSP Investments and the holding company of the Robinson farming family.

The value of the deal was not disclosed but Agri Investor understands it was in the region of A$500 million ($389 million; €320 million), which was around the expected price when the business was put up for sale in mid-2020.

AFF previously bought the 17,300 ha Midkin aggregation and ginning business from Auscott in 2019 for approximately A$300 million – a significant portion of Auscott’s portfolio at the time – and the firm was always seen as a natural potential buyer for the rest of the company.

However, market sources have indicated to Agri Investor that the bidding process for Auscott was highly competitive and AFF was not always the frontrunner, with interested parties emerging from Australia’s superannuation sector, corporate farming enterprises and overseas institutional investors.

The company is also understood to have attracted serious interest from global infrastructure funds attracted to the company’s network of five cotton gins capable of processing more than 1 billion bales of cotton per year and holdings of water entitlements, with more than 140,000 mega-liters of the latter included in the sale. Domestic superannuation funds also assessed the business as a potential infrastructure investment, a source familiar with the process said.

The deal will see AFF acquire all of the Auscott business in one line, including its properties (which includes more than 22,000 ha of irrigated farmland) and its ginning, warehousing, classing and marketing businesses. There was significant interest in splitting the farmland assets from the post-farmgate operations, but AFF showed a desire to buy Auscott in its entirety.

The Auscott acquisition is the latest significant investment by PSP in Australian agriculture, both as part of the AFF JV and separately. In 2019 it struck a A$724 million deal for Webster, one of the country’s largest listed agribusinesses, after acquiring a majority stake in NSW cropping enterprise BFB months earlier in a deal also worth several hundred million dollars.

PSP Investments senior managing director and global head of natural resources Marc Drouin said in a statement: “AFF’s acquisition of Auscott represents a significant milestone, and is the latest in a series of strategic initiatives that the company has launched and delivered on since the inception of our joint venture. We are grateful for and proud of our partnership with the Robinson family in AFF, which is emblematic of PSP’s strategy of teaming up with high-performing and like-minded local operating partners in the agriculture and timber sectors to help them achieve their long-term strategic objectives.”

Agri Investor understands that JG Boswell Company decided to sell Auscott to focus on its US operations, with Auscott representing a relatively small portion of its overall business.

In a statement, JG Boswell Company chairman and CEO James Boswell said: “We are proud of our history of achievement and support of the development of the Australian cotton industry. We have stood together with growers, employees and the community for over 58 years to build something truly world class.

“We are pleased and grateful that Auscott, and its people and their communities, will continue to grow under the leadership of AFF.”

Greg Quinn, the partner at PwC Australia who led the sales process, said the deal would “create a world-class integrated agribusiness that will be beneficial for the whole industry.”