Private super investor interest pushes AAM to seek more ag funding

AAM raising $15m for Western Qld restocking, and looking at more farmland

Agribusiness
Cattle on Terrick Terrick Station, Blackall, which will become part of the AAM Investment Group's agricultural portfolio next week.

Cattle on Terrick Terrick Station, Blackall, which will become part of the AAM Investment Group's agricultural portfolio next week.

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AAM Investment Group plans more capital raisings to fund expansion into in rain-revived farmland

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Surprisingly strong interest in farming ventures from self funded retirees and family wealth managers has prompted AAM Investment Group to plan two more capital raisings in the next six months to fund expansion in rain-revived western Queensland, and elsewhere.

AAM, whose $300 million portfolio of managed investment interests range from timber and poultry farms to running the Regional Livestock Exchange saleyard network, will settle on the purchase of historic Terrick Terrick Station at Blackall next week.

It will also take on leases for two nearby cattle properties.

The investment group's Diversified Agriculture Fund, which was oversubscribed with offers totalling more than $85m when it raised funds in December and January, has taken advantage of that interest with a quick call for $15m to pay for restocking and capital improvements on the 58,800 hectare Terrick.

As coronavirus travel and business restrictions ease a further $50m to $80m capital raising is planned for later this year to enable the purchase of the leased properties, Thornleigh and Moorlands.

More buys in sight

Options to acquire the additional 37,447ha of country have already been signed, but AAM's diversified fund is also doing due diligence investigations on other livestock and mixed farming assets with the view to potential purchases.

In the year to June 30, the newly launched diversified agriculture fund has spent $149.3m on property acquisitions and livestock, backed strongly by self managed superannuation fund owners, private wealth investors and individuals looking to add more agricultural coverage to their investment mix.

There seems to be a large pool of ordinary investors in Sydney and Melbourne who want greater exposure to agriculture - Garry Edwards, AAM Investment Group

The current fundraising will initially be spent restocking the 148-year-old Terrick with Santa Gertrudis, Droughtmaster cattle and the tropically adapted Brangus-Angus composites UltraBlack.

Significant fencing and other infrastructure projects are also in the pipeline.

Garry Edwards

Garry Edwards

AAM managing director Garry Edwards said the business was also looking at reintroducing sheep to Terrick as part of a three-year management plan, although that option would depend on how much fencing and sheep infrastructure needed to be put in place.

"Despite its impressive pastoral heritage and the areas woolgrowing tradition, the station hasn't run sheep for more than a quarter of a century," he said.

Rain-fed recovery

The 148-year-old Terrick, which is accredited fully organic, has been operating well below capacity after enduring lengthy drought conditions in the past decade, but useful rain early this year has spurred on a burst of welcome pasture growth.

The three properties will have a combined cattle carrying capacity of up to 18,000 head, although even if the season continued to recover well, Mr Edwards expected to be carrying at least 20 per cent fewer than optimum numbers for some time while fencing work was undertaken.

Any move to introduce sheep would require high quality exclusion fencing around significant perimeter areas to keep out feral intruders, including wild dogs and pigs.

AAM's newly acquired Sunshine Farms aggregation - three properties in NSW's Lachlan Valley, 30 kilometres from Forbes - is currently running 14,500 Merino ewes crossed to meat sheep sires.

About 7000 hectares have also been planted to crops in line with the fund's diversified income strategy.

Investors keen on ag

"There seems to be a large pool of ordinary investors in Sydney and Melbourne who want greater exposure to agriculture, partly because it's one of the few investment categories paying dividends at the moment," Mr Edwards said.

"What COVID has done has actually highlighted to our target investor base how unevenly correlated their portfolios tend to be.

"We've never had as much interest in our funds as we have seen in our diversified fund at the moment - and rain has certainly helped stir that interest, too.

"But regardless of its drought challenges, agriculture has frequently proven to be the most stable performer over a long period and still paying returns."

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AAM's other agricultural investments include its $120m Southern Cross Poultry fund, a northern Pastoral Development Trust, and a Sustainable Softwood Trust.

The investment group employs about 533 staff over 21 sites and is forecasting $60m in revenue in 2020-21.

"Investora are attracted to Australian agriculture because of the critical role it plays in supplying the basic human necessity of safe nutritious food," Mr Edwards said.

"We firmly believe an investment in a diverse agricultural fund is an invstment in the long term food security of both local and global communities."

A solid portion of investor support has come via National Australia Bank's capital management team and the Alteris private equity investment group.

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