6 October 2015
Debt-burdened Glencore has entered early discussions with a number of sovereign wealth funds and commodities traders as it moves to offload a minority stake in its agricultural business, a division that owns more than 30,000ha of cropping land across NSW, Victoria and South Australia.Singapore’s sovereign wealth fund GIC and Japanese conglomerate Mitsui have already been linked to the sale process, which is being run by Citi and Credit Suisse.
The sale of a stake in the agricultural business, which would value the operation at as much as $US12 billion ($17bn), follows the announcement of an aggressive debt-reduction program by the Switzerland-based company. That program will include selling $US2.5bn of new shares, asset sales and a suspension of dividend payments, targeting $US10bn in debt reduction.
The sale process comes amid increasing interest in Australian agricultural assets, with DataRoom last week reporting China’s New Hope Dairy was circling the Van Diemen’s Land Company in Tasmania.
Meanwhile, Warrnambool-based Midfield Group, which has begun work on a $60 million dairy processing facility in Penola, is also understood to have held talks with potential strategic and capital partners, including New Hope Dairy.
New Hope has been scouring the Australia’s dairy industry for deals to meet booming demand in China, and most recently joined a dairy-farming consortium alongside the Perich family’s Leppington Pastoral Company and Freedom Foods.
Singapore-based Olam International is also said to have held talks with Midfield. The company, controlled by the Singaporean state investment company Temasek Holdings, is flush with funds after Japan’s Mitsubishi Corporation purchased a 20 per cent stake for more than $1bn.
Along with significant container processing, packing, ports and storage assets, Glencore owns agricultural land in Australia. The holdings are in three separate areas, including a large tract in central west NSW near Grenfell, near Hopetoun in Victoria, and near the South Australian border with Victoria.
Others linked to the sale include a Saudi Arabian sovereign wealth fund, Chinese state-backed grains business COFCO and a Canadian pension fund.
Glencore is expected to place the agricultural division assets into a separate vehicle.
Its agricultural operations in Australia began with the formation of Glencore Grain in 2003, and were significantly enlarged by the 2012, $6bn purchase of Canadian grains processor Viterra, which had itself acquired Australia’s largest agribusiness ABB Grain in 2009.
As recently as March, Glencore’s chief Ivan Glasenberg was reportedly considering a concerted push into agriculture.
– See more at: http://farmlandgrab.org