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Laguna Digests Stake In Australia’s PrimeAg

Laguna Digests Stake In Australia’s PrimeAg

Laguna has taken its first bite out of Australia’s agriculture sector with an 11.1% stake in PrimeAg Australia.

PrimeAg revealed this week that Laguna Bay Pastoral Company Pty Ltd. had bought 29.6 million shares in the rural property owner for an average of around A$1.30 a share, equivalent to more than 38 million Australian dollars (US$39.8 million).

Laguna is the holding company for Laguna Bay Pastoral Company Crop Fund No. 8, a relatively new player in Australia’s rural property game, backed by the Global Endowment Fund based in Charlotte, North Carolina and advised by U.S. commodities trader Jim Rogers.

The move comes after PrimeAg earlier this month said it is planning to sell off assets, which include more than a dozen stretching from the Liverpool Plains of New South Wales state to central Queensland state, due to “inadequate recognition by the listed market of the value of the company’s assets.”

PrimeAg Chief Executive Peter Corish told Deal Journal Australia that he hopes to get close to book value for the deal, which would value the assets at around A$420 million.

Tim Biggs, managing director of investments at Laguna, said the fund would be “delighted” to participate in the PrimeAg sale as Laguna looks to build up its broader strategy of building joint ventures with Australia’s top farmers.

We’re convinced that local and global institutional investors will be looking to participate more in this sector

Overall, he is hoping to raise about A$400 million for the fund and has already looked at taking stakes in “countless” Australian farm properties, he said.

“We’re looking to replace a debt capital partnership with an equity partnership,” he told Deal Journal Australia

“Currently most Australian agriculture is owned by family partnerships with some corporate players. We’re convinced that local and global institutional investors will be looking to participate more in this sector.”

PrimeAg’s assets certainly fit into Laguna’s stated wishlist of properties in New South Wales. The stake will also put Laguna in a position to look at the A$250 million unlisted agrifund PrimeAg started in a joint venture with Australia’s A$77 billion Future Fund.

Laguna’s Managing Director of Operations Tim McGavin said the fund was looking to cash in on growing demand for Australian food from Asia by providing equity for farmers, who have been left hungry for financing as banks have reined in their lending.

“We’re coming to the end of the hard rock and energy cycle and the beginning of the soft commodity cycle,” he said.

Published by The Wall Street Journal – Deal Journal Australia, Sept 20 2012


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