Property

PSP-backed Australian Food and Fibre buys Auscott

Grain Central, May 18, 2021

AFF has acquired the Auscott business which includes farms, four gins and classing operations in NSW. Photo: Auscott

LEADING New South Wales cotton grower and ginner Auscott has sold to Australian Food and Fibre (AFF), a joint venture between the Robinson family of Moree and Canada’s PSP Investments.

Auscott owns and operates gins at Trangie and Warren in the Macquarie Valley, Hay in the Murrumbidgee Irrigation Area, and a twin gin at Narrabri in the Namoi Valley, where Auscott began with a 2800ha property in 1963.

With 40,000 hectares of land including 22,000ha of developed irrigation country, and more than 143,000 megalitres of water entitlements, it is believed to be Australia’s biggest cotton grower.

Along with ASX-listed Namoi Cotton, Olam’s Queensland Cotton, and LDC, Auscott is one of Australia’s four biggest cotton ginners, with capacity to produce more than 1 million bales per annum.

Auscott was founded in 1963 by US-based J.G. Boswell Company and came to the market in July last year through financial advisers PricewaterhouseCoopers (PwC).

“The bringing together of Auscott and AFF creates significant production, processing and marketing scale across this integrated supply chain,” Auscott chief executive officer and managing director Ashley Power said.

“This will support mill and brand customers in terms of a much larger, reliable, traceable supply from production through to the mill.”

Auscott assets include warehousing operations and a classing laboratory, all supported by an established domestic and international marketing business.

The post-farmgate businesses will be led by Mr Power and managed by his Sydney-based team.

J. G. Boswell Company chairman and CEO James W. Boswell said the company was proud of its history of achievement and support of the development of the Australian cotton industry.

“We have stood together with growers, employees, and the community for over 58 years to build something truly world class,” Mr Boswell said.

“We want to express our appreciation to all the people who have contributed and guided Auscott to its success.

“We are pleased and grateful that Auscott, and its people and their communities, will continue to grow under the leadership of AFF.

PwC dealmaker Greg Quinn led the transaction.

AFF, PSP footprint expands

AFF is headquartered in Moree, and in 2017 entered into a JV with PSP Investments which that year bought the Koramba cotton gin and farm, between Goondiwindi and Mungindi, from another US-born pioneer of cotton in Australia, Dean Phillips.

In 2019, AFF bought the Midkin gin and adjoining farms from Auscott to wind up Auscott’s involvement in the Gwydir Valley.

AFF said Auscott’s operations were “highly complementary” to AFF’s operations in row-cropping in northern NSW, where it has been involved in the cotton industry for more than 40 years.

AFF managing director Joe Robinson welcomed Auscott’s high-calibre team, which he said shared AFF’s long-standing passion for excellence in cotton production and processing.

“Auscott’s six decades of operations in the sector reflects Australia’s leading position on the global stage in high-quality cotton and the importance of a long horizon for value creation.

“The combined group will continue to be very supportive of the communities in which it currently operates,” Mr Robinson said.

“Our acquisition of Auscott is a great example of the power of combining local industry expertise and knowledge with long-term capital managed by a team dedicated to agriculture.”

PSP Investments is one of Canada’s largest pension investment managers.

Its investments in Australian agriculture include a majority stake in BFB at Temora, NSW, a JV with Hewitt Cattle Australia, and another with Warakirri Asset Management through Daybreak Cropping, a 75,000ha dryland operation with aggregations in Queensland, NSW, Victoria and Western Australia.

PSP also owns one of the world’s largest almond orchards at Robinvale in north-west Victoria, and last year finalised a successful takeover of major south-eastern Australian irrigator and nut producer Webster Limited, which has since delisted from the Australian Securities Exchange.

Through its JV with AFF, it bought Bengerang Limited, including its land and water entitlements at Bourke and Garah in NSW, from Webster Limited in 2018.

PSP Investments senior managing director and global head of natural resources Marc Drouin said AFF’s acquisition of Auscott represented a significant milestone, and was the latest in a series of strategic initiatives the company has launched and delivered on since the inception of the AFF JV.

“We are grateful for and proud of our partnership with the Robinson family in AFF, which is emblematic of PSP’s strategy of teaming up with high-performing and like-minded local operating partners in the agriculture and timber sectors to help them achieve their long-term strategic objectives.

In December, sources reported AFF as the buyer of Auscott, and this week’s announcement has come following approval of the sale by Australia’s Foreign Investment Review Board.

PSP Investments is one of Canada’s largest pension investment managers, with approximately C$169.8 billion of net assets as of March 31, 2020.

It manages a diversified global portfolio of investments and manages funds on behalf of Canada’s federal Public Service, the Canadian Forces, the Royal Canadian Mounted Police and the Reserve Force.

Source: AFF, Auscott

NOTE: An earlier version of this story incorrectly linked Macquarie with Warakirri Asset Management.

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