Agricultural investment trust Rural Funds Group (RFF) has developed a taste for macadamias and beef, with a water chaser.
The group yesterday revealed plans to raise $100 million and plans to develop 1000 hectares of macadamia orchards, buy a number of cattle farms, and acquire 8.3 billion litres in water entitlements.
RFF said in a statement to the ASX that it was raising funds via a fully underwritten 1 for 8.4 accelerated pro rata non-renounceable entitlement offer at $2.47 a share, a rather skinny 5% discount to the Wednesday close of $2.60.
RFF said it will invest the funds in its macadamia orchards, having revealed in February that it would plant 500 hectares of macadamia orchards this calendar year.
Some of the funds will be invested in cattle operations, with the group already close to the likes of JBS (the Brazilian meat giant and Australia’s biggest meat processor and exporter) and Australian Agricultural Co, leasing land to the big corporate farmers and feedlot owners.
The 500 hectares in central Queensland represent a fraction (10%) of the 5,000 hectares of macadamia orchards Rural Funds Management (RFM), the trust’s manager, plans to develop over the next 10 or so years.
Rural Funds said it had acquired $104 million of land and water in Rockhampton, Bundaberg and Maryborough over the past couple of years for the development of 5,000 hectares of macadamia orchards.
Developing those orchards will be a decade long development, costing half a billion dollars or more.
Planting has commenced at Maryborough, with 500 hectares to be planted by November 2021. An additional 500ha will be planted by June 2022.
The current equity raising provides funding for these developments.
The company also eyeing off water entitlements in the NSW Riverina, which are leased to a private farming company for a term of five years.
“RFM believes demand for secure water in this region will increase over the long term, as permanent plantings such as almond orchards continue,” RFF said in Thursday’s statement.
Including the impact of the acquisition of the water entitlements transaction and equity raising, the company said its 2021-22 forecast adjusted funds from operations would now be 11.6 cents per unit, with accretion from additional acquisitions and finalisation of macadamia lessee.
Its 2021-22 forecast distributions of 11.73 cents has also been confirmed, a 4% increase on the year to June 30.
