STRONG take-up from hedge funds and private investors for Guinness Peat Group’s 28 per cent stake in agricultural land company Tandou has cleared the way for the agricultural company to expand its water trading and farming activities.
Tandou chief executive Guy Kingwill is overseeing the harvest of a company record 7100 hectares of cotton at Lake Tandou in far west NSW.
But it is on hearing that water levels coming in from the northern river system are higher than expected, and that the GPS system had actually under-recorded how much water the company has, which gets Mr Kingwill rubbing his hands.
“You don’t know how excited I am to hear this,” he said, after receiving the update on the water levels.
From Tandou’s low-cost demountable headquarters at Mildura airport, the company has been shrewdly accumulating bite-size bits of water and selling them off to farmers and governments.
This year Tandou sold about 16,000 megalitres of water entitlements for $17.3 million. Last year it sold 14,000 megalitres for $19.4 million. Every year for the last four years at least, Tandou has been making stand-out water trades.
“We haven’t been lucky, we have just participated like everyone else. There is no luck at all – it is just strategy,” Mr Kingwill says.
Tandou is now as much a water trading company as it is a land and agricultural one. “We believe in the long-term value of water but we need both [water and land] .”
The water strategy has clearly appealed to the new investors, too.
New York-based hedge fund ADK Capital and former Perry Capital director and partner at Lazard Freres George Brokaw have taken almost 10 per cent of Tandou from GPG this year.
A large portion of the remaining GPG stake has been taken up by Laguna Bay Pastoral and PF Agriculture – majority owned by the wealthy Sydney-based Parsons family .
“I think their glory days are ahead of them, not behind them,” Laguna Bay Pastoral’s chief executive Tim McGavin says of Tandou.
Posted on The Land, 15 April 2013