Australian investment manager QIC plans to raise AUD400m (€280m) from institutional investors over the next 12 months to invest in food and agriculture.
Phillip Cummins, QIC’s principal for private equity, told IPE Real Estate there was increasing interest among domestic super funds and global investors in the sector.
Cummins told IPE Real Estate: “We would like to raise a pool of capital to deploy when acquisition opportunities arise, but this could be in the next 12 months or over a couple of years.”
QIC made its first significant investment in May, jointly acquiring an 80% stake in one of Australia’s oldest and most established cattle stations on behalf of its clients along with the UK-based Pension Protection Fund (PPF) and the Queensland government’s Defined Benefit Plan.
The transaction involved an equity investment of around AUD300m.
The business, founded in 1877 and known as the North Australian Pastoral Company (NAP), owns 5.8m hectares across Queensland and the Northern Territory, and around 178,000 head of cattle.
NAP’s largest shareholder was the Foster family, with the UK-listed MP Evans agribusiness group owning 34%.
The family has retained a 20% interest in the business, which has an enterprise value of AUD519m.
Cummins said QIC was in various stages of due diligence to acquire more assets.
“In the short term, we are not looking at (launching) blind pools, but in the longer term that is definitely part of our plan,” he said.
In the interim, QIC plans to bring small groups of institutions to co-invest, just as it did with the UK fund in the NAP acquisition.
Although the AUD78bn manager has large portfolios in real estate and infrastructure, private equity accounts for just AUD5bn of funds under management, and, in the private equity sector, weighting to food and agriculture is less than 10%.
Cummins said the sector had been identified as a growth area, and that QIC wanted to expand into dairy, horticulture and grains.
Food and agriculture is an emerging thematic investment for institutional investors, he said.
“Firstly, there is strong and growing demand from traditional markets, where consumers are now looking through the food supply chain as opposed to looking at food as a commodity,” he added.
“Secondly, the rising middle classes in Asia is looking to consume more protein, in particular beef. High-quality food will become increasingly scarce as farmland becomes a limited resource.
“Over the next 5-10 years, we see this asset class evolving, and it will become part of institutional portfolios. It is likely institutional investors could allocate a couple of percentage points of their capital to food and agribusiness.”