AUSTRALIA – Olam Orchards Australia (OOA) has entered into an agreement with Public Sector Pension Investment Board (PSP Investments) to sell 89,085 megalitres of its permanent water rights in Australia for A$490 million (US$332.5m).
In a separate transaction, PSP Investments- the bone of Canada’s largest pension investment managers has also agreed to acquire approximately 12,000 hectares of almond orchards and related assets in Victoria, Australia.
The orchards were previously leased to OOA. According to the terms of the agreement, both the almond orchards and the associated water rights will continue to be operated by OOA.
OOA has also entered into a new, tiered revenue sharing arrangement with PSP Investments for the almond orchards, related assets and permanent water rights, pursuant to which it will pay PSP Investments a share of revenue from the almond orchards.
The global agribusiness company disclosed that the arrangement is for an initial period of 25 years with options to renew for another 25 years.
Olam’s Managing Director and CEO of Edible Nuts, Ashok Krishen remarked: “Consistent with our asset-light approach to tree crop production, this arrangement will enable Olam Orchards Australia to focus on operations and continue to deliver best-in-class products and services to customers.
“I am confident this partnership with PSP Investments will help lead the industry in sustainable farming and agricultural practices, and protect critical natural resources, such as water in Australia.”
PSP Investments Managing Director and Head of Natural Resources, Marc Drouin, added:
“Our agreement with Olam Orchards Australia is consistent with our strategy to partner with best-in-class operators who take the long-term view, and to invest in high-quality agricultural assets globally.
“It is also quite complementary to our existing permanent crop investments around the world and represents a unique avenue to add scale, particularly in Australia.”
The transaction is expected to be completed in December 2019, subject to customary conditions.
On completion, Olam will receive cash proceeds of A$490.0 million and is also expected to book a one-time pre-tax capital gain of approximately A$311.0 million (US$211.0 million).
In addition to the transaction, Olam revealed that it is currently engaged in various discussions for divesting or restructuring various assets and businesses in line with the Strategic Plan, some of which may be concluded in this financial year.
The company has already agreed to sell the real estate assets of its onion and garlic processing facility in Gilroy, California to Chicago-based investment management firm Mesirow Financial for US$110.3 million.