License article

Foreign owners help Australian farms 'flourish'

The Consolidated Pastoral Company, a huge beef enterprise with Australian cattle stations covering about 5.5 million hectares, is a “great example” of how a local agricultural business "can flourish and grow" with support from foreign investment, according to the company’s chief executive.

Consolidated Pastoral, which has recently been advertised for sale and is generating speculation it could sell for as much as $1 billion, is tipped to attract interest from foreign investors.

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The company was formed by the late billionaire Australian businessman Kerry Packer 35 years ago with the purchase of a Northern Territory cattle station. It now has 16 cattle stations in Northern Territory, Queensland and Western Australia, as well as an 80 per cent stake in two Indonesian feedlots.

The Packer family exited the business in 2009, when it sold its majority stake to the English private equity firm Terra Firma. Some estimates have put the 2009 sale price at $425 million.

With Consolidated Pastoral now on the market its chief executive officer, Troy Setter, said that “under Terra Firma’s ownership, the business has been transformed from a cattle producer to an integrated quality beef and cattle supplier to international markets”.

He also moved to reassure the market that Australian buyers would have the opportunity to participate.


“We have spent a lot of time and effort planning the process to make sure that Australian buyers are given every opportunity to participate,” he said.

Mr Setter said $50 million had been invested in the business, about 350,000 hectares of land had been opened up and carrying capacity had been increased by over 50,000 head on the properties.

“We have increased productivity through the development of land including watering holes and fencing as well as the application of technology and genetics,” he said.

“There is a great opportunity for the next owner to invest and drive more value through the development of CPC’s stations. We have an additional 3.1 million hectares of land that could be developed.''

Mr Setter said it was “still pretty early days” in the sales process, which could take months.

In an interview with the Australian Financial Review in 2009 the founder of Terra Firma, Guy Hands, said he saw the private equity firm's investment in Consolidated Pastoral as having a seven to 10-year horizon.

"Most private equity firms have put off investing in agriculture," he said at the time.

"Our view has always been to do investments that are contrarian. So our investors expect us to do things that are unusual - it's what we do," he said.

Given that just over nine years have elapsed since the founder of Terra Firma made those comments, it seems the original timeline for the cattle business is being followed.

A recent Knight Frank advertisement about the sale said Terra Firma “is offering the business for sale as a whole or in parts”.

It’s understood that first round bids are due next month.

With the business likely to attract interest from foreign investors, it could potentially pose another test for Australia’s Foreign Investment Review Board.

But the possibility of it being sold “in parts” means that it could generate more potential interest from local buyers than might otherwise be the case.

The sale of the massive S Kidman and Co property ran into trouble over FIRB issues before eventually being sold to a company that is two-thirds owned by Gina Rinehart's Hancock Prospecting. The remaining thir do the joint venture is owned by Chinese company Shanghai CRED.

The scale of the Consolidated Pastoral Company's operation is also enormous. At about 5.5 million hectares, the cattle properties cover about 55,000 square kilometres. By way of comparison, Switzerland covers about 41,300 square kilometres and Tasmania about 68,400 square kilometres.

The huge beef cattle operation has come onto the market at a time when the Australian agricultural sector is very buoyant, and both beef prices and international demand for beef are strong.