Ellerston ups GrainCorp stake

15 May, 2014 04:00 AM
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The specialist fund manager has been buying GrainCorp shares for the past few months

THE former Packer investment trust Ellerston Capital has regained a significant stake in GrainCorp, 18 months after selling out to give US raider Archer Daniels Midland (ADM) its initial foothold in the big agribusiness.

Ellerston has confirmed it owns 7.61 per cent of GrainCorp's share capital - well ahead of its previous 6.5pc stake which had made the it the biggest single shareholder until October 2012.

The specialist fund manager has been buying GrainCorp shares for the past few months.

GrainCorp's share price has been just over $8.84 this week, having risen from around $7.60/share in late February to peak around $8.97 early this month.

In late April Ellerston advised the Australian Securities Exchange (ASX) it had become a substantial shareholder with a 6.3pc stake.

Ellerston was originally established as a division of the Packer family holding company Consolidated Press Holdings in 2004, named after the family's trophy Hunter Valley grazing property "Ellerston".

Believed to manage an investment portfolio worth about $3 billion, it has a history of investing in the agribusiness sector, originally buying GrainCorp shares in 2008.

The funds management business also held a solid stake in the former AWB Limited and is currently a 13pc shareholder in the Goodman Fielder food business which sold its edible fats and oil assets to GrainCorp in 2012.

The Packer's CPH downgraded its stake in Ellerston in August 2011 to about 25pc after family head and Casino mogul James Packer stood down from its board.

The investment company is now 75pc owned by a trust of Ellerston employees, including chairman and chief investment advisor Ashok Jacob, a long time adviser to Mr Packer and his father, the late Kerry Packer.

Ellerston Capital was GrainCorp's biggest shareholder prior to ADM acquiring its 19.8pc stake, which was made possible by Ellerston and AMP selling big portions of their investment to the giant US agribusiness to enable its $3.2 billion bid to buy the company. Ellerston followed up selling its remaining shares soon after.

ADM's takeover move was eventually blocked a year later by federal Treasurer Joe Hockey.

GrainCorp released its first half profit results for 2013-14 today, with a smaller crop in northern growing regions resulting in a first-half statutory net profit drop of 43pc to $50 million.

GrainCorp reported its half-year earnings of $166m EBITDA (earnings before interest, tax, depreciation and amortisation and before significant items) is down from $227m for the same period in 2013.


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    Andrew Marshall

    Andrew Marshall

    is the national agribusiness writer for Fairfax Agricultural Media

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