News & Analysis

QIC: parts, not whole, of CPC attractive

London-based Terra Firma is seeking to sell Australia’s largest privately owned beef producer, but not every industry giant appears ready to snap up the coveted asset in one chunk.

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QIC’s North Australian Pastoral Company might be interested in properties within the Consolidated Pastoral Company portfolio currently being auctioned by TerraFirma, its UK-based private equity owner.

Damien Frawley, QIC’s chief executive and chairman of NAPCO, told Agri Investor that, in his opinion, TerraFirma would see more demand for its CPC assets if they were willing to break up the portfolio.

“They have some assets in there that don’t really suit us,” said Frawley, when asked if NAPCO might purchase the CPC portfolio as part of QIC’s plans for expansion within Australia. “They have some very high-quality assets, including properties in the Kimberley in Western Australia and feedlots in Lumpung and Medan in Indonesia, but they aren’t right for us because they are too far away. They also have some very good ones in Queensland.”

Terra Firma launched the auction earlier this year, having named Goldman Sachs and Knight Frank as advisors, several sources told Agri Investor. It is understood that the firm is open to selling CPC in bits if that means it can pocket a better return than through a single sale. The company has an enterprise value of A$850 million ($662 million; €535 million), though its owners are reported to be aiming for A$1 billion.

Terra Firma declined to comment.

The firm purchased CPC, the largest privately owned beef producer in Australia, in 2009. At the time, the asset was an “under-managed and under-invested business,” Terra Firma says on its website. It now runs 16 cattle stations, with a carrying capacity of about 400,000 head of cattle, across 5.5 million hectares of land. Its team numbers up to 200 in the high season.

Over its 10-year ownership, Terra Firma developed the company by acquiring tracts of property, growing station capacity, streamlining the supply chain and investing in technology such as genetics. “CPC has transformed from being largely a cattle producer into an integrated premium-quality beef and cattle supplier to international markets,” Terra Firma said.

In 2015, the company increased its stake in JJAA, its Indonesian joint venture, from 50 per cent to 80 per cent. The deal, it said, would improve its portfolio’s performance and make CPC a stronger player in the global beef supply chain.