Monday, February 05, 2007

Macquarie goes whole hog for Agribusiness Ventures

Mac Bank fund on the trail for rural property

February 05, 2007

By Jane Schulze
The Australian
Copyright 2007

IT has invested in airports, car parks, toll roads and media companies but now Macquarie Bank is hoping to buy huge chunks of Australia.

Macquarie has created the Macquarie Pastoral Fund, a wholesale fund it is now marketing to institutions through which it plans to buy between five and eight cattle or sheep stations.

MPF has also enlisted some of Australia's top station managers: former Colonial Agricultural Company chief Alan Hayes is its chief executive and David Taylor, owner of the Pooginook merino stud, is an independent director.

Macquarie Financial Services Group director Tim Hornibrook told Sky News Sunday Business that there were few investment opportunities in the rural sector. "And more and more people are looking for non-traditional investment opportunties and we believe this fits that criteria," he said.

Macquarie Pastoral is now raising $200 million from domestic and offshore institutions and plans to spend up to $1 billion on properties. The fees Macquarie will extract from managing the fund have not been disclosed but Mr Hornibrook said they were "comparable" to similar vehicles.

The fund might list on the stock market in five to eight years, which would make it the only listed rural property group apart from Australian Agricultural Company. But Mr Hornibrook said Macquarie Pastoral was different from AACo as the latter only focused on cattle.

"The whole strategy is to be large-scale and have diversification - diversification by regional area and therefore by climatic zones and diversification by product type," he said. "That underpins your returns and it reduces your volatility."

Macquarie is targeting stations along the east coast from the northern tip to northern Victoria.

But Mr Hornibrook denied properties would now be cheaper because of the drought. "I don't think good properties ever become cheaper," he said.

But Macquarie hopes to find cost savings from consolidating farms, especially from transport costs.

"If you got breeding cattle or sheep on cheaper, more isolated country and then bring lighter animals down to fattening properties which are closer to the market ... at that point we can carry heavier animals shorter distances so that will reduce costs," he said.

Macquarie is following a "paddock to gate" strategy, so all marketing and export issues will be left to the buyers of the animals.

Mr Hornibrook said there was increasing demand for beef and sheep meat as there was a strong correlation between increasing disposable incomes and increasing red meat consumption.

"But the exciting thing to us is if you look at some of the statistics, by 2030 there will be 615 million new people in cities in India and China and by 2010 Asian imports of red meat should exceed our total production of cattle and make up 90 per cent of our sheep production," he said.

© 2007 The Australian.

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