CALGARY — The Alberta government’s investment fund manager is snapping up huge tracts of Australian farm land and forests as global demand continues to grow for those resources.
In a deal announced Thursday, Alberta Investment Management Corp., or AIMCo., is teaming up with Australia New Zealand Forest Fund to buy the property for $408.7 million. AIMCo is shouldering 80 per cent of that amount.
“The consistent theme is that Asia is requiring more food, more energy and more materials,” AIMCo chief executive Leo de Bever said in an interview.
“This investment, where we can play both the agricultural and the forest angle, fits that one.”
In recent years, AIMCo has delved into the resource space by buying stakes in grain handler Viterra Inc. (TSX:VIT) and Precision Drilling Corp. (TSX:PD).
The latest deal “shows you what you will see more of from AIMCo over time,” de Bever said.
The property covers more than 2,500 square kilometres across six Australian states. Flooding, which has caused major damage throughout the country in recent months, isn’t much of a concern because the land is at relatively high elevation, de Bever said. Since the bulk of the land is on the coast, drought is not much of an issue, either.
The assets belonged to Great Southern Plantations, which has been in receivership since May 2009.
The deal was not an easy one to put together, de Bever said.
“The receiver, obviously, was trying to sell the thing in pieces on the assumption it would try to maximize its revenue. It wasn’t going too well.”
It finally began to come together last summer.
“We said, ’Ok — enough. Here’s the price we’re willing to offer for the whole thing — cash. Let’s get on with it.’ That’s when things started to move really fast.”
It took months to do due diligence on each of the 650 land parcels. Australian regulators did not give AIMCo much trouble in allowing the deal to go ahead, de Bever said.
“We helped them solve a problem. We stabilized a whole bunch of properties in terms of how they’re going to be run from here on in.”
The deal is Australia’s largest private forestry estate deal to date.
An Australian timber investment management firm, New Forests Pty Ltd., will manage the land.
“This transaction is indicative of the trend to move towards institutional ownership of Australia’s plantation forestry estate, which will allow the industry to consolidate and become internationally competitive,” said New Forests managing director David Brand, a Canadian who has worked with de Bever in the past.
De Bever said he has been observing the same trend not only in forestry and agriculture, but in real estate as well.
“Right now most of the good real estate is owned by pension plans — like all the office towers and shopping malls,” he said.
“In fact, it’s creating a problem for us because our clients have a bigger appetite for real estate, and we have to go abroad to find it.”
Edmonton-based AIMCo, a Crown corporation, handles more than $70 billion on behalf of provincial public sector pension plans, endowment funds and the Alberta government.
in pensions, endowments and other funds on behalf of Alberta public sector clients.