Just months after backing the launch of a new-age, seaweed-based stockfeed venture, billionaire mining and agribusiness magnate Andrew Forrest has spent $12 million buying into Australia's biggest stockfeed processor, Ridley Corporation.
The Forrest family's private investment house Tattarang now holds 5.1 per cent of the animal nutrition group, whose brands include the Barastoc and Rumevite large animal feed lines, Cobber dog foods, Primo Aquaculture servicing farmed fisheries, and the CSIRO-developed prawn superfeed, Novacq.
Ridley has processing sites in all states except Western Australia, plus a Novacq plant in Thailand.
The listed agribusiness, which reported an $8.6 million statutory loss in 2019-20, has seen its share price improving for the past year, although it is still well under its 2015 to 2019 highs of $1.50/share, or better.
Tattarang's 16m share buying spree between late August and early February cost the Forrest family between 70 cents and 90c/share.
The investment group's assets span meat processing, horticulture, oyster farming, energy, telecommunications, biopharmaceuticals, property, tourist resorts and the recently acquired big name bush clothing and footwear brand, RM Williams.
Its Harvest Road agribusiness division includes six WA pastoral stations, WA's biggest beef abattoir at Harvey, a massive feedlot development and aquaculture operations near Perth and Albany in WA.
In August Harvest Road became a cornerstone investor, with GrainCorp, Woolworths and several other players, in CSIRO's a methane neutralising stockfeed additive business, FutureFeed.
FutureFeed uses the cold water seaweed variety asparagopsis to boost feed conversion efficiency and limit greenhouse gas emissions from cattle.
Given Ridley's stockfeed business has not been a high profile investment performer of late, Andrew Forrest's sudden interest in the company has attracted some speculation.
Tattarang's recent appetite for new technology ventures, oysters and sea fish farming suggests Ridley's Novacq and Primo businesses may be a particular attraction.
The bigger picture livestock opportunities in a hungry global market are also promising for animal nutrition suppliers.
"The stockfeed industry presents an absolutely essential service for the food production industry," said research head with investment advisory group Wilsons, James Ferrier.
"Given the growth in demand for poultry and pig products and the increasing number of livestock in beef and lamb feedlots, and the merger prospects in the stockfeed sector, it's an attractive business space to be in.
"We think Ridley is a good investment.
"It's had three consecutive halves of earnings growth, largely achieved by cost reductions and the initial contribution from investment in new capacity."
Mr Ferrier noted there was a perception that stockfeed businesses were potentially more profitable if seasonal conditions were poor, as livestock were more likely to need supplementary feed.
However, Ridley had wide exposure to many stockfeed market segments, from aquaculture to feedlots and mainstream producers.
"There are plenty of revenue opportunities in good seasons, too."
Ridley annually produces about 2m tonnes of feed products and ingredients at 20 sites within Australia, servicing the dairy, beef, poultry, pig, horse, sheep, research, pet food and aquaculture industries.
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The story Twiggy Forrest spends $12m on stake in Ridley stockfeeds first appeared on Farm Online.