Public Sector Pension Investment Board (PSP Investments), one of Canada’s largest pension investment managers, has acquired the permanent water rights of Singapore-listed Olam International in Australia for about A$490 million ($332.5 million).
In a statement, PSP Investment said the global food and agribusiness company, through its wholly-owned subsidiary Olam Orchards Australia, has agreed to sell 89,085 megalitres of its permanent water rights to a related entity of PSP.
Additionally, in a separate transaction, the Canadian pension fund manager also agreed to acquire, for an undisclosed amount, about 12,000 hectares of Victorian almond orchards currently leased by Olam Orchards Australia.
The almond plantations were originally developed by Timbercorp in northern Victoria but have been sold to PSP by Schroder Adveq, a Swiss-based private equity group.
PSP Investments managing director Marc Drouin said the deal with Olam is complementary to the pension fund manager’s permanent crop investment around the world and represents a unique opportunity to add scale, particularly in Australia.
PSP is already the majority owner of northern NSW and southern Queensland pecan nut growing and processing business, Stahmann Farms.
“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,” Drouin added.
Both the almond orchards and the associated water rights will continue to be operated by Olam. Under the agreement, Olam Orchards Australia will pay PSP Investments a share revenue from the almond orchards for an initial period of 25 years, with options to renew for another 25 years.
Ashok Krishen, Olam’s managing director, said the agreement will enable Olam Orchard Australia to focus on operations and continue to deliver 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,” Krishen said.
The transaction is expected to be completed in December 2019, subject to customary conditions. On completion, Olam will receive cash proceeds of A$490 million and is also expected to book a one-time pre-tax capital gain of approximately A$311 million ($211 million).
Headquartered and listed in Singapore, Olam is a top food and agribusiness company that supplies food, ingredients, feed, and fiber to about 19,800 customers worldwide.
In addition to the transaction with PSP Investments, Olam International said it is currently engaged in various discussions for divesting or restructuring various assets and businesses in line with its strategic plan.
Olam is majority-owned by Singapore state investor Temasek Holdings and counts Japanese trading house Mitsubishi Corp as its second-largest shareholder.