Future Fund's rural play sours
A LONG-awaited move by the $71 billion Future Fund into agricultural land investment was threatening to unravel last night as its partner in the venture, PrimeAg Australia, faced a board ousting over the poor performance of its shares.
Shareholders representing 30 per cent of the company have been angered by plans for PrimeAg to raise its $125 million stake in the new land investment fund via a share issue at a discount to its already depressed price, reports The Australian Financial Review .
PrimeAg wants to take advantage of weak prices for more than $1 billion of irrigated cotton properties on the market, including the famous Cubbie Station and Carrington Cotton in Queensland.
The Future Fund's interest comes at a time when heightened concern over foreign sovereign wealth funds buying agricultural land in Australia has led to a full Senate inquiry.
Chinese and Qatar government- backed operators have purchased more than $200 million of agricultural land, and more offshore investment in farms is expected, with a consortium of hedge funds and a Chinese investor competing to buy Cubbie Station.
Dominic McCormick, the chief investment officer at Select Asset Management, which is supporting the board push by shareholder Australia Food and Fibre (AFF), said he was not happy with the capital raising.
"We are not against them pursuing a strategy of developing external funds, we are against them making existing shareholders stump up the funds to get that started at a big discount to net asset value," he said.
AFF has proposed removing chairman Peter Corish, deputy chairman Roger Corbett and directors Steve Williams and Stephen Williams, and replacing them with David Robinson, the chairman of AFF.
The Australian Financial ReviewSource: http://www.afr.com