ASX-listed ag player, Alterra, has appointed John McGlue to its advisory board as it gears up to enter the potentially lucrative agricultural sector with an initial focus on the avocado market.
McGlue brings over 30 years of experience in corporate communications and financial markets to Alterra and he is the founder of corporate advisory firm, Castle Gates Australia.
In 2002, Mr McGlue acquired a 50% interest in financial PR firm Porter Novelli Perth and in 2008, the combined business was acquired by NYSE-listed FTI Consulting.
Mr McGlue is also a former Chair of Australia and senior managing director of FTI Consulting Strategic Communications.
Amongst a veritable suite of media experiences, including former Business Editor and State Political Editor of The West Australian newspaper, McGlue also brings a solid financial background to the Alterra advisory board, having spent time as an equities analyst, institutional dealer and CEO of Australian Discount Stockbroking Limited.
Alterra established its strategic “advisory board” in early 2019 with the appointment of well known Perth financial player and Future Fund Board of Guardians and Crown Resorts director, John Poynton.
The mandate of Alterra’s advisory board is to provide access to networks, strategic feedback, views on opportunities, risks and introductions to potential deals and sources of capital.
Alterra has been developing a pipeline of potential WA project opportunities with existing land and water owners and has been introducing its new business model to investors.
The company’s target sectors include high-value tree crops, intensive dairy and other irrigated cropping opportunities including avocados in WA.
Alterra’s three-phase business model begins with an investment of time and hard costs into screening opportunities and carrying out research, detailed feasibility and modelling work.
Once a viable opportunity is identified, phase two involves an investment of between 5% to 25% of the equity required for the identified agricultural project to get off the ground with the balance raised from investors.
During phase two, Alterra collects establishment and management fees from the developing asset and performance fees once the asset is sold. Alterra then enters the annuity income phase under which it will charge the new owner an annual management fee.
The Perth based company already has one annuity producing project in its pocket with a 15% stake in Carbon Conscious, which was demerged from the company on the 31st of December 2018.
The carbon forestry business, which continues to be managed by Alterra for a fee, is expected to generate revenues of approximately $21 million over about eight years.
Carbon Conscious is looking to distribute 90% of its net profit after tax to shareholders.
Alterra Management said that it is seeing significant demand from offshore institutions who are keen to invest in Australian agricultural assets that provide steady, annuity type returns.
Alterra Managing Director Oliver Barnes said: “As we accelerate the execution of our business model and amplify our voice within the sector, John’s appointment will greatly enhance Alterra’s ability to reach, communicate and interact with the capital markets and our stakeholders. I look forward to his strategic input and advice during the year ahead”.
Mr McGlue said: “Investors – Australian and increasingly from North America and Europe – recognise the enormous potential of the Australian agricultural sector to produce high demand, high margin products at scale to feed into the domestic and Asian markets.”
“Alterra’s opportunity is to meet that institutional demand through a robust business model, deep experience in the sector, access to quality deal flow and strong execution capability”.
The National Farmers’ Federation is targeting growth of the Australian agricultural industry from about $60 billion to $100 billion by 2030.
A recent report by Deloitte highlighted that to achieve this target, the industry would need to grow around 4.5% a year, which is nearly three times more than the average 1.7% growth rate over the last decade.
Owner-operator investment from farmers alone does not look to be sufficient to meet the Farmers Federation growth targets going forward and Alterra’s model of co-investing with financial institutions to produce long term agricultural crops just might be the panacea for the industry.
Alterra’s co-investment model is also a potential vehicle for farmers to diversify their conventional bank funding models, which may provide some level of discomfort for the banks who have traditionally called the shots in the agricultural sector.
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