Terra Firma’s CPC, KAI eye south-east Asia expansion – exclusive

Following this month’s Carlton Hill station deal, the two companies are looking at further feedlotting and finishing beef investments in the region.

Consolidated Pastoral Company chief executive Troy Setter has told Agri Investor the Terra Firma-backed company could partner with Chinese-owned Kimberly Agricultural Investment to develop further downstream interests in markets like Cambodia and China.

KAI bought 476,000 hectares of land from CPC earlier this year, most of which it has leased back to the company for at least 10 years, but it has kept 14,000 hectares on which it is developing a cotton, chia, sugar, corn and sorghum operation. The Chinese-owned company, the Australian entity of Shanghai Zhongfu, also entered into an integrated strategy deal to supply CPC with the by-products used as livestock feed from those crops.

However, Troy said the two companies are now in talks to extend their partnership to finishing assets such as feedlots in Asia. “We have been talking to KAI about further opportunities in things such as feedlotting and further value adding [in south-east Asia],” said Troy. “With northern Australia being so close to south-east Asia, we see that the majority of cattle will be further value-added and fattened, finished and processed in countries like Indonesia and Vietnam.”

The deal to sell the property to KAI took over two years, said Troy, “because it was important that we spent time together understanding each of our needs and requirements, building a strong relationship and strategy”.

He said the unique nature of the transaction, whereby they were selling the property to a Chinese-owned company and then leasing it back for a long period of time, made it more complex, while local government and Foreign Investment Board Approval also took time.

“For us, it wasn’t costly because the application was submitted by KAI before the FIRB began to have substantial fees, as it does now of up to A$100,000 per transaction,” said Troy. “It took numerous months for the approval. We worked closely with FIRB to ensure that we were able to show that the national interest test was met and to show that the capital coming in from KAI was going to be used to develop northern Australia and enhance the production of northern Australia, and that it wasn’t just business as usual.”

He said that at the time Chinese investment in land was “a bit sensitive”.

CPC already has two feedlots in Indonesia through joint ventures with high net worth investors Dicky Adiwoso and Greg Pankhurst – from Indonesia and Australia respectively – where it is also looking to consolidate and grow its regional market share.

Troy said that the firm had recently upped its investment in those partnerships to 80 percent, and was looking at further opportunities to expand into south-east Asia and supply beef to China. He added that China had only recently carried out livestock test flights from Australia and that the company had to look at its presence across the whole region. Cooinda, Gowan and Mount Marlow are developed stations in Queensland running about 12,000 head of cattle collectively.