Year in Review, 2023: Grow, Canada

With a string of big deals in Australia and elsewhere, Canadian investors continued to flex their muscles and demonstrate their commitment to the asset class in 2023.

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In a statement that could have been written in any of the last several year-in-review articles here at Agri Investor: it was another big year for Canadian institutional investors.

The large Canadian funds continue to see natural assets – forestry, farmland and everything in between – as a vital part of their overall portfolio mix, and show no signs of a change of heart as to the important diversification benefits the asset class provides.

The big agribusiness M&A deal of the year in North America saw publicly listed Bunge agree to acquire the Glencore-backed private business Viterra in an $8.2 billion tie-up. Among Viterra’s shareholders were CPP Investments, which will hold an approximate 12 percent stake in the combined business and recieved $800 million cash, and British Columbia Investment Management Corporation, which, while not disclosing financial details of its terms, will presumably have done very well out of the deal.

Elsewhere in private markets, Australia proved to be a happy hunting ground again for Canadian investors, usually deploying capital directly without the help of fund managers.

PSP Investments continued to be busy by all accounts, although few deals emerged publicly. One that did become public was a A$100 million-plus deal to acquire the majority of assets held by family-owned business Macadamias Australia early in the year.

It also formally took over management of the Daybreak Cropping portfolio from Warakirri Asset Management in 2023, freeing up the latter to launch its first institutional farmland fund.

Ontario Teachers’ Pension Plan was also active, securing one of the year’s more eye-catching deals when it agreed to acquire KKR’s 49 percent stake in carbon project specialist GreenCollar. It was a massive transaction worth around A$600 million – and OTPP senior managing director, natural resources, Christopher Metrakos told us that the fund was bullish on the opportunities to invest in environmental markets.

“Agriculture and timberland are unique in the sense that they can be net sources of emissions through poor management practices or net sources of sequestration through more sustainable land management practices,” Metrakos said. “We believe that market-based solutions to encourage these sustainable management practices are critical.

“We see other areas within environmental markets – particularly biodiversity and water quality – having similar growth trajectories.”

OTPP also invested in fruit producer Montague through its subsidiary Pomona Valley late in the year.

Caisse de dépôt et placement du Québec entered the Australian farmland sector with a A$150 commitment to Gunn Agri PartnersWilga Farming platform (alongside a A$50 million investment from the Clean Energy Finance Corporation).

Interestingly, CDPQ doubled down by purchasing a minority equity stake alongside CEFC in Gunn Agri Partners itself, giving it skin in the game with a farmland GP.

And not to be left out, Alberta Investment Management Corporation showed how serious it is about continuing to deploy capital through its partnership with New Agriculture, agreeing a deal to acquire the Kimberley Cattle Portfolio, which it will add to Lawson Grains as it builds an enormous, diversified set of assets. That deal was worth around A$300 million.

There are other deals out there, too, not least in other jurisdictions. But the Canadians’ continued willingness to deploy capital at scale in Australian natural assets (when institutional investors from Australia itself still seem reluctant) is a sign of rude health for the asset class.