Roc Partners-backed Stone Axe Pastoral Company acquires 50% stake in QLD feedlot

Stone Axe continues expansion of its vertically-integrated business on Australia’s east coast as it prepares to produce its first Wagyu meat before the end of 2019.

Wagyu beef producer Stone Axe Pastoral Company has acquired a 50 percent stake in the Yarranbrook feedlot in southern Queensland.

Stone Axe, majority-owned by Sydney-based private equity firm Roc Partners, purchased the stake from family-owned meat processor John Dee, which will continue to own the remaining 50 percent, with the feedlot to be operated as a joint venture.

The feedlot will provide services to Stone Axe’s own cattle as well as John Dee’s own programs and will continue to provide custom feeding for other parties.

Some of Stone Axe’s full-blood Wagyu cattle are already being fed at the property, Stone Axe managing director Scott Richardson told Agri Investor.

“We’ve had a relationship with John Dee for some time now so this is a continuation of that,” he said. “This is a natural progression as part of our strategy as a vertically-integrated producer of premium wagyu beef.”

Richardson declined to disclose the value of the transaction.

The Wagyu beef market is “under pressure,” Richardson said, thanks to a large amount of cross-breed wagyu producers entering the market.

“The prices being paid now for F1 feeder cattle are nowhere near what they were,” he said.

“But in the long term, there will still be sufficient demand for the premium wagyu sector, especially as consumers begin to work out the difference between pure-breed and cross-breed wagyu.”

Richardson told Agri Investor that Stone Axe expects to produce its first box of meat before the end of 2019.

“We have some very patient investors who can see the opportunity available in the premium food sector, particularly as an Australian-owned company,” he said.

Stone Axe has been investing in its east coast breeding operation in recent months, recently agreeing 10-year leases on two properties owned by Rural Funds Management to take the total number of its leases with RFM to four.

Roc Partners was established following the management buy-out of Macquarie Group’s private markets business unit by its senior executives in June 2014 and has A$6.4 billion ($4.6 billion; €4.1 billion) in funds under management as at December 31, 2018. It purchased a majority stake in Stone Axe in 2017.

In 2018, the Wagyu producer received a A$3.3 million investment from the New South Wales government via the NSW GO Equity Fund alongside a A$7.7 million investment from First State Super. At the time of that investment, NSW deputy premier John Barilaro said the equity injection would go towards creating “the largest full-blood Wagyu cattle herd outside of Japan.”