Macquarie buys Australia cotton farm stake from Chinese strategic

The deal will see MIRA pay an undisclosed sum for a 29% interest from Ruyi and a 20% stake held by Roger Fletcher, the director of regional agribusiness operator Fletcher International Exports. Ruyi, which acquired its 80% stake in 2012 for an estimated A$240 million ($163 million), will retain a 51% holding.

The transaction ends an extended sales process for Ruyi, which was required to pare its position by local authorities wary of growing Chinese investment in assets considered strategic. It remains subject to some conditions but has cleared all regulatory approvals, including foreign investment review approvals.

Cubbie comprises 93,700 hectares of farmland supported by irrigation infrastructure covering 13,300 hectares. The property also includes 8,900 hectares of cereal cropping area and 49,400 hectares of grazing, remnant vegetation and balance area. Ruyi, will continue to operate Cubbie under a long-term operating agreement, with no change to the current on-property management and team.

Tensions related to foreign, and specifically Chinese, ownership of Australian primary industrial and infrastructure assets has been a recurring theme for investors despite a relative scarcity of formal regulatory blocks. Investors in this space are advised to engage with interested parties from the outset, emphasizing attention to asset development impacts on regional stakeholders.

Ruyi sought to overcome negative sentiment around its involvement in Cubbie by investing in the property, committing to the employment of local suppliers and workers, and a prioritization of environmental issues. To this end, the deal with MIRA envisions a voluntary water contribution to the river system in the region which is prone to drought. Cubbie Agriculture CEO Paul Brimblecombe said Ruyi has provided “great support for the local community through the drought cycle.”

MIRA positions itself as one of the largest investors of its kind with $129 billion in assets under management, including 155 portfolio businesses, about 600 properties and some 4.7 million hectares of farmland producing red meat, grains and oil seeds. It also invests in farm automation, including real-time data monitoring technologies.

The firm has been active in Australia’s agriculture space for 10 years and claims to be one of the country’s largest diversified farmers. “Cubbie is one of Australia’s premier agricultural assets and aligns with our investment thesis for long-term sustainable farming operations,” Liz O’Leary, MIRA’s head of agriculture, said in a statement.

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• Topics
• Australasia
• Infrastructure
• Real estate
• Australia
• Macquarie Group
• Agriculture