ASX-listed Alterra continues to make strides into the high-value avocado sector with the execution of a local partner agreement with leading Western Australian producer, French’s Group.
French’s Group, a family-owned company that established the first commercial-scale avocado crop in WA’s Pemberton region in 1986, has over 32,000 trees that produce more than 5.8 million of the nutrient-packed fruit per annum.
It also holds a significant shareholding in Advance Packing and Marketing Services, which packs avocados for over 40 growers in WA with a modern facility that boasts the capacity to pack 6 million trays of avocados per season.
Under the agreement, French’s Group will provide Alterra with local partner services that include local representation, assistance with origination and assessment of investment opportunities, localised production experience and technical support for a three-year period in the Peel, South West and Great Southern regions of WA.
Alterra will issue French’s Group with 2 million performance rights as part of the deal. The first 1 million rights will vest upon the execution of a binding term sheet for the development or purchase of 50 hectares of avocados.
The remaining rights will vest upon the execution of a binding term sheet for the development or purchase of an additional 150 hectares of avocados.
Separate agreements will be executed for services and products to be provided by French’s Group for each asset at both the development and management stage.
Alterra Managing Director Oliver Barnes said: “This agreement greatly enhances Alterra’s execution capabilities by collaborating with a team that are recognised as leaders in their industry.”
“Alterra believes that the avocado industry is entering its next wave of development with the opening up of potentially lucrative export markets and significant investment inflows being made by institutional investors.”
The company has built up its capabilities in recent months with the appointment of veteran agribusiness executive, Brett Heather, as its chief operating and technical officer in July. Back in April the company also reached an exclusive technical partner agreement with horticultural expert Tyson Bennett, who specialises in the outperformance of high-value tree crops.
Taken together, these developments will help drive the company’s three-phase business model, which begins with it screening opportunities and carrying out research, detailed feasibility and modelling work.
Once an opportunity has been identified as economically viable, Alterra will move to the next phase and invest between 5% to 25% of the equity required for the project and raise the balance from investors.
It will receive establishment and management fees during the development of the asset and performance fees once the asset is monetised.
Alterra will then enter into the annuity income phase under which it will charge the new owner an annual management fee with a market review every five years.
