TPG eyes quick return from Inghams property sale

The property agent running the sale, Danny Thomas, director of agribusiness at CBRE, told Reuters that 56 farm properties have been put on the block and are expected to fetch up to A$650 million ($590 million). He added that a number of large pension funds and sovereign wealth funds have expressed an interest in the assets.

The deal would be structured as a 20-year leaseback of two portfolios of processing plants, feed mills, hatcheries and breeder farms.

TPG bought Inghams after a protracted bidding war in 2012 that saw The Blackstone Group offer around A$1.1 billion for the business before deciding to lower its price on finding few groups remaining in the running for the asset. Inghams suspended the process until early 2013 when TPG won out.

The private equity firm offered A$850 million in cash plus a A$30 million vendor note payment in six years time. It obtained A$625 million in financing from a syndicate of local and international banks. The 4.8x EBITDA valuation is said to compare favorably with the 7.8x EBITDA Affinity Equity Partners paid for Tegel Foods, New Zealand's leading poultry firm.

This is not the first time TPG has used property sales to enhance deal returns in Australia.

In 2006, the private equity firm's then Asian affiliate - Newbridge Capital - and Blum Capital bought department store chain Myer for about $1 billion, half in equity, and exited via a $2 billion IPO three years later. The investment generated a 6x return - 4.5x from operational involvement, 0.5x from debt payouts and 1x from a property deal.

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