Danes in $60m Qld cattle play

19 May, 2014 06:05 AM
Comments
7
 
There are plenty of good properties out there and there are plenty of people who want out but can't

DANISH pension fund Pensionskassernes Administration (PKA) has backed the purchase of $60 million worth of Queensland cattle stations through local operator Sustainable Land Management Partners.

The 480,000 hectares of country, from Blackall to Cunnamulla, will be held in the SLM Australia Livestock Fund and will be managed by SLM Partners, which has an office in London.

SLM Partners director Tony Lovell told The Australian Financial Review that the SLM fund is looking to expand even further. "We are in the final stages of bringing in another $30 million of blended equity and debt from a global insurance company," Mr Lovell said.

Colliers International's valuation team is advising the potential investor.

"There are plenty of good properties out there and there are plenty of people who want out but can't," Mr Lovell said.

The fund raised $75 million from PKA in its first closing in June 2012 and is promising investors a return after fees of 12 per cent. "PKA are very patient long-term investors with a 20 to 30-year approach," Mr Lovell said. "We have had some discussions over the past couple of years with a few Australian institutions, and would heartily welcome an Australian investor into the fund."

SLM Partners has kept a low profile as it aggregated collections of properties into "hubs" in areas near Cunnamulla, Quilpie and Blackall. Cunnamulla includes the 43,000ha Padua Park hub purchased for $10 million; the 49,000ha Willacora hub for $9.3 million; the 71,000ha Eureka Plains for $7.4 million; the 48,000ha Amenda and the 79,000ha Garrawin for $11.8 million and $4.3 million respectively.

At Quilpie, SLM put together the 165,000ha Colac hub for $6.4 million while at Blackall it has the 25,000 ha Listowel Downs for $11.2 million.

SLM Partners started in 2007 when former Citi employees, who were hatching a plan for a separate fund, joined Mr Lovell and the late Bruce Ward of Colly Farms. The concept behind SLM Partners' management is about trying to bring the land and cattle back to a more natural state. "Nature has big herds, constantly moving and kept bunched up, whereas humans have had little herds, all spread out in the same area for a long period of time," Mr Lovell said. The smaller area cattle have to travel the more weight they put on so better prices when sold.

SLM can pinpoint the location of cattle on any of their properties at any one time with each property divided into miniature, well-watered paddocks.

"What we are doing is in no way a criticism or comment on how any other farmer or grazier is operating or has operated their business.We are simply trying something a bit different.

"In particular if any of the properties we purchased have had less than stellar improvements we very clearly recognise and fully respect that their previous owners have always faced competing demands on their scarce resources," Mr Lovell said.

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READER COMMENTS

Bob
19/05/2014 7:56:46 AM

The danes have backed the wrong horse here. There are a number of people (Beetaloo for example) that are going ahead in leaps and bounds through implimenting cell grazing in extensive areas and making a success of it. I hope it doesent blow up (12% return??), we need corporate funds to invest in ag but it needs to be done well, otherwise everyone loses.
Queen St Farmer
19/05/2014 7:43:42 PM

12 per cent return? Sounds eerily similar to the 7pc operating return and 7pc capital growth in the 2007 Prime Ag prospectus. We all know how that ended up.
Qlander
20/05/2014 9:11:29 AM

I know this country...bags not being the manager when it all goes pear shaped. The capital investment needed to implement anything even remotely like what they're suggesting would be several hundred times earnings. It would be cheaper to hire shepherds/drovers to camp with the cattle permanently. Also in Australia there were no large herds, kangaroos live in small groups spread across the landscape.
Makka
20/05/2014 11:26:43 AM

12 per cen? Tell 'im 'e's dreamin'! I wonder if ANY of the highly paid execs has had ANY experience running cattle in these challenging areas that they are playing with other people's money in.
Richard F
21/05/2014 6:08:50 AM

Are they buying it for running cattle? or something much more sinister..........like coal?
squatter
22/05/2014 3:57:43 AM

I think you are on to it Qlander. Shepherds probably are a good concept to consider if there is the scale involved with the operation. Capital investment initially would be bold but as someone else mentioned not unproved, ie Beetaloo. I agree the Kangaroos would be a challenge. As for the habits of roos, I suggest that their behaviour and numbers has been so skewed by the un natural influence with no predators, absence of Dingos. I don't see anything impossible, just a spectacular shift in thinking and a mighty task in implementing. Bon Voyage!!
station hand
21/06/2014 12:09:29 PM

Large numbers in a small paddocks with heaps of water an old idea stops the cattle from walking of the weight but I’ve worked in some of this country and the outlay will be huge and maintenance is going to be an issue but it can work if they are willing to work at it and 20 to 30 years seems short in this country as for 12 pc is not going to happen unless the market for properties goes though the roof or there in to china as for coal and gas well that’s a waiting game.

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