January 29, 2024

photo credit: NZL

By Lynda Kiernan-Stone, Global AgInvesting Media

Australian specialist private markets investment manager Roc Partners has agreed to acquire a 25 percent equity interest in New Zealand Rural Land Company’s (NZL) portfolio in a cash deal of approximately NZ$44.2 million (US$26.84 million) that values NZL’s 75 percent equity share in the LP at NZ$132.5 million.

NZL’s holdings currently count 14,847 hectares (36,688 acres) being managed by eight tenants. The firm invests strictly in New Zealand agriculture and forestry, explaining that the country has the lowest carbon emissions for protein production in the world, and that its climate and low-input farming models are well positioned to meet demand as sustainability continues to be increasingly important.

To further lower risk, NZL takes a land-ownership-only approach, eliminating the on-farm operational risks, animal health risks, and price volatility often faced by farmers, generating returns through two channels: the cash income from long-term leases to best-in-class tenants, and the appreciation of New Zealand’s structurally-advantaged, but scarce, agricultural land. 

Prior to completion of the deal, NZL will transform its group assets to a New Zealand registered limited partnership (LP) and the general partner of the LP will be a New Zealand company owned by both NZL and Roc Partners in proportion to their equity interests.

After closing on the expected date of February 8, 2024, NZL will use the funds to pay down the $11.8 million owed on the convertible note that it drew down in April 2023 to partially pay for the acquisition of its forestry assets – the 737-hectare (1,821-acre) Pohonui and 2,400 hectare (5,930-acre) Southern Skies holdings. The remainder will be allocated as working capital while new growth opportunities are explored. 

Moving forward, the business strategy of the LP will remain as established, and will continue under the management of New Zealand Rural Land Management Ltd. Partnership. Further, under the terms of the agreement, NZL and Roc Partners will co-invest through the LP in future acquisitions with Roc Partners funding 25 percent of the equity needed, thereby reducing NZL’s associated capital requirements. However, if Roc Partners does not wish to fund a certain acquisition, NZL may proceed with the deal on its own. 

“This transaction reflects the strong alignment of two partners with deep experience investing in high quality rural assets,” said Rob Campbell, chair, NZL. “Upon completion NZL will fully review allocation of the funds. NZL and Roc will work together on future growth opportunities.”

Brad Mytton, managing partner for agriculture, Roc Partners, noted that their company brings 25 years of investment expertise to the table, adding, “We are attracted by the quality of NZL’s individual assets, its commitment to sustainability, and the long-term potential for accessing quality rural land assets in New Zealand.”

“NZL enjoys advantaged access to rural deal flow, and we expect a fruitful ongoing investment relationship. We are committed and hold ourselves and our investees to the same high standards in the actions we take to transition to a more sustainable economy.”

~ Lynda Kiernan-Stone is editor in chief with GAI Media, and is managing editor and daily contributor for Global AgInvesting’s AgInvesting Weekly News and  Agtech Intel News, as well as HighQuest Group’s Unconventional Ag. She can be reached at lkiernan-stone@globalaginvesting.com.

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