Australian agribusiness is being targeted by overseas pension funds, private banks and family offices for joint venture opportunities, according to business advisory firm Bentleys.
Speaking at a recent breakfast in Sydney, Bentleys director of international services Brendan Goulding pointed to forecasts that Australian agriculture stands to capture up to $1.7 trillion in exports by 2050.
Mr Goulding acknowledged that foreign ownership of Australian agricultural assets is a “very topical issue”, with both sides of politics proposing foreign investor registers and investment thresholds.
The Australian banking system is the primary source of funding for Australian funding at the moment, but much more capital is required, Mr Goulding said.
“We see opportunities for co-funding opportunities to work with international investors as an alternative source of funding,” he said.
There has been emerging interest from international investors over the last 12 to 18 months, Mr Goulding said.
“These types of investors are looking for partnerships: joint ventures. Not just buy-outs,” he said.
There are two broad groups of investors looking to buy into Australian agriculture and food production, Mr Goulding said.
The first is strategic corporate investors coming out of Asia – specifically China, Korea and Japan, he said.
“They’re trying to get access to agriculture to feed their growing population,” said Mr Goulding – pointing to the recent Foreign Investment Review Board-approved purchase of Cubbie Station by Chinese and Japanese investors in 2012.
The other broad group of investors are institutional, he said.
“They are pension funds, private banks and family offices that are looking for diversification in their portfolios outside of equities and infrastructure,” Mr Goulding said.
Family offices in Europe, the UK and the US are looking to add agricultural assets as a defensive component of their portfolios, he said.
“They’re taking a long-term view in order to protect the generations of wealth those [family offices] have,” Mr Goulding said.
The most apparent macroeconomic factor driving the interest in Australian agribusiness is global population growth, he said.
With nine billion people in the world by 2050 the demand for food will steadily increase in coming decades, Mr Goulding said.
Increased protein consumption is another macroeconomic driver, he added – along with food security fears amid spikes in the price of maize, wheat and rice.
Finally, Australia is in close proximity to Asia (an important factor when it comes to perishable goods) and has a stable government as well as low sovereign risk, Mr Goulding said.