PSP buys Australian almond orchards, water rights

Schroder Adveq purchased 18,000 hectares of orchards, of which 12,000 hectares were planted with three million trees, from Olam in early 2014 for A$211 million. The asset was then leased back to Olam under an 18-year contract. Olam is a commodities conglomerate backed by Singapore’s Temasek Holdings.

The deal was led by the Adveq Real Assets Harvested Resources Fund, with Municipal Employees' Retirement System (MERS) of Michigan and Denmark's Danica Pension from Denmark among the LP co-investors. Laguna Bay Pastoral, an Australian fund manager that specializes in agriculture, was brought in to manage the local holding structure.

At the time, the orchards, located in Victoria, were said to account for approximately 50% of Australian almond output and 3.5% of the global total. In 2018, Australia was the world’s second-largest almond producer after the US with a 6% share. There were 45,089 hectares nationwide and output came to 79,901 metric tons. Exports totaled 60,894 tons – and A$552 million in revenue – in 2018-2019, with China and Hong Kong accounting for 20% of volume, up from 2% the previous year.

Olam Orchards Australia (OOA), which controls the water rights, will continue to operate the orchards after the two transactions close. It has entered into a new, tiered revenue sharing arrangement with PSP for the orchards, related assets and water rights, whereby PSP will receive a share of the revenue from the orchards.

“Our agreement with Olam Orchards Australia is consistent with our strategy to partner with best-in-class operators who take the long-term view, and to invest in high-quality agricultural assets globally. It is also quite complementary to our existing permanent crop investments around the world and represents a unique avenue to add scale, particularly in Australia,” Marc Drouin, a managing director and head of natural resources at PSP, said in a statement.

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• Topics
• Australasia
• Consumer
• Trade sale
• Buyouts
• Australia
• Agriculture
• Adveq Management AG
• PSP Investments