Agribusiness assets up for grabs

Institutional interest in distressed managers

Alice Uribe

Thu 14 May 2009

Some institutional fund managers are considering the acquisition of the assets of distressed agribusiness managers, according to investment consulting firm Mercer.

"We are aware that some of the managers that we like that invest for institutional clients are looking at the assets of managed investment schemes (MIS), although this is not the core of their exposure," Mercer global head of alternatives research Dragana Timotijevic said.

"It is interesting for managers as they can take advantage of the fallout from these MIS or some of the other players. They have good assets which can add to their pipeline and they can get them at good prices."

While Frontier Investment Consulting does not have any exposure to MIS assets, senior consultant Allison Hill said it made sense for managers to invest in those types of assets if it was within their risk-and-return profile.

"It wouldn't surprise me if unlisted managers are looking for opportunities when listed markets aren't reflecting true valuations, so that they can arbitrage the opportunity," Hill said.

"Property, infrastructure, timber and just general private equity are some sectors where there could be opportunity."

She said liquidity would still be a consideration, but managers could currently purchase quality assets at good prices.

The comments come on the back of an unsettling period for agribusiness companies involved in MIS.

Timbercorp last month announced it had gone into voluntary administration and agribusiness giant Great Southern is currently under a trading halt and last month announced it had listed three of its northern Australian cattle properties for sale by public auction.

While not commenting directly on Timbercorp or Great Southern's assets, Timotijevic said it was possible managers could get good-quality assets at a low price and then deploy them.