Hostplus leads agribusiness push

Hostplus is looking to spearhead an industry fund push into the agribusiness sector.

Hostplus CIO Sam Sicilia. Picture: Aaron Francis

The $25 billion top-performing industry superannuation fund Hostplus is looking to spearhead moves by the industry fund sector to plough potentially billions of dollars into the agribusiness sector.

While industry super funds now hold only one-third of 1 per cent of their funds under management in Australian agriculture, Hostplus chief investment officer Sam Sicilia said the group had held preliminary talks with other industry funds about pooling resources to back vertically integrated agriculture projects.

“We are looking at that seriously ... we would do it through a pool ... You would want to deploy $20 billion in agriculture over time (through a mix of debt and equity). You can’t just deploy $100m. That would require equity contributions from 6-10 super funds,” Mr Sicilia said in an interview with The Australian.

“The beauty of the industry fund model is that we are happy to collectively invest. We are not in competition with each other in that part of the equation.”

He said Hostplus was hoping to do something next year.

“That is our time frame. I can’t impose a time frame on other funds. It has already gone to our board as a teaser ... We will be in a much more informed position to start talking seriously to other funds next year. And I think they are all doing the same thing.”

He said the catalyst for the talks was a recent Industry Super Australia paper that found super funds that had no previous experience with agriculture could build up their understanding of the sector by investing in expert institutional players and/or top tier producers directly.

The report by ISA chief economist Stephen Anthony said there were real opportunities for super funds to roll out more obvious equity and debt products targeting successful large to mid-tier operators and up-and-coming rural producers.

“This could include appropriately priced short-term livestock, and seed finance targeting large and medium-sized producers and the leaseback of farmland to choice producers,” the report said.

“The broad strategy would be to unlock value while de-risking investments, especially over time.”

It also found there was a case for establishing a rural and regional development bank to provide advisory services to rural producers and arrange long-term finance to allow operators to more efficiently intensify their operations.

Mr Sicilia said Hostplus was looking at investing in assets where it could control the supply chain from paddock to plate.

“What we are not talking about is buying a farm here and there with sheep and cattle. Rather, vertical control of the whole process — from the farm to the feedlot to the slaughterhouse to the refrigeration and to the contract with Coles and Woolworths at the end. If you can control the process and you have scale, some of the characteristics are falling into place,” he said.

Super funds have historically been badly burnt by their investments in the agricultural sector, but they have been wading back into the space.

In March this year Hostplus backed a $10m raising for Melbourne-based agribusiness accelerator SproutX’s venture capital fund to make investments in agritech start-ups.

AustralianSuper, VicSuper and the Queensland Investment Corp have also been investing in agriculture in recent years. Last May QIC purchased an 80 per cent stake in the cattle station operator North Australian Pastoral Company.

At the time QIC chief executive Damien Frawley said the investment was made with a 20 to 30-year time frame in mind.

Other local managed funds such as Laguna Bay, Macquarie Infrastructure and Real Assets and Warrakirri Agricultural Trusts have also invested in Australian agriculture projects.

Major Canadian pension funds and the US-based Teachers Insurance and Annuity Association, TIAA have invested more than $1bn in local agriculture