PSP joint venture buys Australian farms from Webster in $133m deal

ASX-listed Webster has agreed to sell its wholly owned subsidiary Bengerang to a joint venture including Canada’s Public Service Pension Investment Board (PSP).

The deal is worth A$132.7 million ($97.5 million; €84.1 million). PSP is making the investment alongside an Australian family business led by David Robinson, in a tie-up known as AFF. FIRB approval for the deal has already been obtained.

As part of the deal, PSP has also acquired a 19.15 percent stake in the Webster business, making it the company’s largest single shareholder and granting it a board seat. It will purchase the shares from the AFF joint venture and shareholders in the Robinson family business, which currently owns them.

Bengerang holds several land and water entitlements in northern New South Wales, including an aggregation at Garah, near Moree, and the Darling Farms aggregation at Bourke. The properties comprise a total of 9,593 hectares of developed irrigated land.

As part of the deal, Webster will retain the rights to the proceeds of the 2018 cotton crop which has just been harvested, with cotton producers experiencing a profitable season thanks to near-ideal growing conditions and strong demand for the product from overseas.

Webster will use the divestment to focus on its core horticultural, agricultural and grazing operations in the Riverina region, western NSW, South Australia and Tasmania, the company said in a statement to the ASX.

Bengerang was acquired by Webster in 2015 at an implied equity value of A$124 million.

In a statement, Webster chairman Chris Corrigan said: “This transaction will result in Webster having a geographically concentrated portfolio of cropping operations at Darlington Point (Kooba) and Hay. Webster’s irrigated cropping area will reduce from 24,500 hectares to 14,000 hectares.

“Further development work at Kooba and Hay is expected to increase Webster’s irrigated cropping area back to 20,000 hectares in the 2019 year.”

PSP Investments had a 3.2 percent allocation to natural resources as of March 2018, according to its latest annual report. This represented C$4.8 billion ($3.7 billion; €3.2 billion) of assets under management, of which 60.7 percent is in Australasia. Of its AUM in natural resources, 52.3 percent is in timberland and 36.1 percent in agriculture.