Canadian Pension PSP Investments Acquired Majority Stake in One of Australia’s Largest Grain Growers

Australian diversified farming business BFB Pty Ltd. announced that the Public Sector Pension Investment Board (PSP Investments), one of Canada’s largest pension investment managers, has acquired Proterra Investment Partners’ majority stake in the business, for a reported $208 million.

Launched in 1999 and headquartered in Ottawa, Canada, PSP Investments manages C$158.9 billion (US$120 billion) in assets as of September 30, 2018. The fund controls a global portfolio consisting of private equity, real estate, natural resources, private debt, and is active in public markets, and its Natural Resources Group is already invested in Australia’s ag sector through investments in row cropping, animal protein, fresh produce, and tree nuts.

In September it was announced that BFB Pty Ltd, a diversified farming business based in New South Wales, Australia, was seeking bids from prospective corporate and superannuation bidders.

Proterra began its relationship with BFB in 2010 when it acquired a stake in the portfolio as part of its agricultural investment strategy, and this sale, which was expected to fetch in the region of $300 million, is a result of the firm looking to exit its investment.

"We are proud to have been a part of BFB's transformation over the last 10 years into a top-tier and diverse agribusiness with deep operational expertise," said Brent Bechtle, founding partner, Proterra Investment Partners. "We believe that PSP Investments is an ideal partner to support the next stage of BFB's growth."

Pushback

The sale to PSP Investment has been completed despite recent objection to the possibility. In November 2018, Agrinova, a farmer consortium in the Riverina region of Australia, petitioned the Australian government asking for answers.

Agrinova, who had reportedly bid $270 for the business, wrote to the Australian Prime Minister questioning how the sale meets the country’s Foreign Investment Review Board’s (FIRB’s) requirement that an agricultural sale to a foreign party must be in the best interest of the nation.

In a statement announcing the acquisition it states that after an exhaustive and competitive process, PSP’s bid was considered to be the most compelling based on a variety of factors including: - Its offered price;

- Its low executive risk and creditworthiness to complete the transaction;

- The strategic fit between PSP’s Natural Resources Group and BFB; and

- The long-term capital at hand to support BFB’s expansion plans.

“Since partnering with Proterra in 2008, we have achieved outstanding growth underpinned by scale and efficiency,” said Terry Brabin, founder and managing director, BFB. “Now, with PSP Investments, we look forward to succeeding in the next phase of our growth strategy to support our business, employees, customers, suppliers and the broader Australian community.”

BFB (Big Farming Business)

Headquartered in Tamora and founded in 1985, BFB currently owns a 28 -farm cropping portfolio totaling a collective 44,167 hectares. In the 80s the business began as a trucking company, but soon expanded into cropping and grain storage. Today BFB is active in grain production, piggeries, and fuel and fertilizer distribution, and controls a 332,000-ton grain storage facility owned in partnership with Cargill to supplement on-farm storage for BFB properties, and to integrate grain trading, storing, and blending to the business, reports Grain Central. Additional grain storage totaling 75,300 tons is spread across various BFB sites.

Moving forward, BFB will maintain its current business structure and headquarters, and its current management team will remain in place.

“We are impressed with BFB’s team, performance and integrated business model, and we are excited to partner with them in their continued strategic development,” said Marc Drouin, managing director and Head of Natural Resources, PSP Investments. “This investment is emblematic of PSP’s strategy to partner with world-class and like-minded local operators who are also committed to best practices in the areas of employee health and safety, the environment, community engagement and corporate governance.”

“We have full confidence in BFB’s Management team and its employees to continue to grow this incredible farming business, for the benefit of BFB, the local community and Australia’s agricultural sector.”