Pension investor open to super fund farm deals

One of Canada’s largest pension investment managers plans to make further acquisitions in Australian agribusiness.

One of Canada’s largest pension investment managers plans to make further acquisitions in Australian agribusiness.

One of Canada’s largest pension investment managers plans to make further acquisitions in Australian agribusiness and is open to partnering with local superannuation funds to build on the more than $2bn it has invested in the nation’s rural economy over the past five years.

PSP Investments, which invests on behalf of the Canadian public service, armed forces, the Royal Canadian Mounted Police and the Reserve Force, aims to have more than $C250bn ($265bn) in assets under management by 2028 and Australia now represents half of its agricultural investment portfolio.

“PSP is going to double in size over the next decade … We still have about $1bn to deploy (per year). We are targeting that Australasia and North America will be 80 per cent of our portfolio roughly and I continue to see that split remaining about the same,” Marc Drouin, PSP’s senior managing director and global head of natural resources, told The Australian in his first wide-ranging interview on the group’s Australian strategy.

On Thursday he will be a keynote speaker at The Australian and Visy’s annual Global Food Forum, which is being held online for the first time.

The bulk of PSP’s Australian investments are in what Mr Drouin called “buy and operate” joint ventures, rather than the model used by some other ­Canadian and US pension funds where they buy land, lease it to farmers to operate and play no role in the operations.

“We will look at continuing to invest to ensure our partners are at the forefront of technology. We will also do some more add-on acquisitions where it makes sense and are continuing to look at opportunities,’’ he said.

Australian super funds have been reluctant to invest in the local agricultural sector, wary of the volatility and the illiquidity of the investments, which Mr Drouin said had caught his attention.

“It is definitely something we have noticed. We haven‘t come across them as much as you might have expected,’’ he said.

One exception is Macquarie Group’s agricultural arm, whose chief executive Elizabeth O’Leary will appear at the Global Food Forum. The group is pouring more than $3bn into three special Australian-focused agricultural investment funds and now owns and operates 50 large-scale farms in Australia worth more than $2.5bn.

Mr Drouin said PSP already had a joint venture with a super fund in New Zealand for its investments there in timber, as was open to doing the same in Australia.

“Absolutely. We recognise we are far away. We would be more than happy to have local financial investors alongside us who are like minded. To have more eyes and ears on the ground. Our model is about partnering,’’ he said.

He said the focus of future investments by PSP in Australia would be in permanent crops — crops that grow on trees, such as almonds and walnuts — compared to row crops, such as cotton and soybeans.

PSP was also looking at more post-farmgate investments to leverage its scale and better serve its customers.

“(That is) on the treenuts side on the shelling and the processing and distribution. You could see us (also) do investment in storage for our row crops and the logistics,’’ Mr Drouin said.

Montreal-based PSP is one of the largest organic meat companies in the country through its joint partner Hewitt Cattle Australia.

But PSP made its biggest headlines last year when it paid $854m for the 180-year-old Webster group, one of Australia’s largest growers of walnuts.