Terra Firma stake still on solid ground, says CPC

24 Nov, 2014 07:35 AM
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CPC chief executive Troy Setter. CPC is one of Australia’s largest beef producers.
Terra Firma are showing their belief and commitment to the beef industry
CPC chief executive Troy Setter. CPC is one of Australia’s largest beef producers.

THE Consolidated Pastoral Company (CPC) says its owner, London-based private equity fund Terra Firma, is committed to the company and the beef industry for the time being.

The Australian Financial Review reported on Thursday that Terra Firma was considering a partial sale of up to 40 per cent of CPC after being approached by several Chinese players.

"Quite a few opportunities are being presented to us, and Barclays has been retained to help explore those," CPC chief executive Troy Setter said on Sunday. He said there was "certainly considerable interest out of Asia" to secure supply and land.

Some within the industry believe CPC has been on sale for the last two years. The company has a book value of about $700 million. Since it was bought in 2009 from James Packer for a reported $450 million, farm property and meat prices have declined in ­difficult years. Mr Setter said the latest talk was a sign of an imminent sale.

"I don't think so, I mean CPC is owned by Terra Firma who is a private equity, so they will exit at some stage, but they are long-term asset holders and developers and there's still quite a bit of time left in the fund that CPC sits in, so we'll see."

"Terra Firma are showing their belief and commitment to the beef industry and they believe there is further value that can be developed out of CPC." Mr Setter said CPC had received interest from Indonesia and China, and said the company was "well positioned to deliver meat and cattle from Australia into Asia," due to current joint ventures in both Indonesia and China.

But others were less convinced.

"Investors seem more interested in thematic than yield," one senior ­industry source said, saying the "food into Asia" story was more compelling than the numbers and returns to date.

"With Terra Firma you'd have to say that the amount of changes at the top [of CPC's executive hierarchy], it probably hasn't been the happiest experience," adding that, "they invested outside their core competencies."

Mr Setter is excited about the year ahead, and bullish about company profitability and property prices thanks to the free trade deal with China.

"I think Australia's done a great job with the free trade agreement," he said.

AFR

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