The Macquarie Pastoral Fund, a Sydney-based fund that aims to own and operate cattle and sheep properties across Australia, has reached A$700 million (€345 million; $436 million) of invested and committed capital in its debut fundraising effort, according to the fund’s director, Tim Hornibrook.
Hornibrook said he hopes to raise between A$1 billion and A$1.3 billion by the end of the year.
Cattle: the next frontier
Macquarie Pastoral Fund is being raised through a wholesale offering to pension funds, endowments, funds of funds and similar institutional and qualified investors. The wholesale offering allows the fund to market itself publicly without tripping the same regulatory requirements under Australian laws as a retail offering to the general public.
Macquarie Group, whose subsidiary acts as the fund manager, is invested in the fund and will be re-investing its performance fees, Hornibrook said.
The fund went to market in June 2007 and made its first acquisition a month later when it purchased the Pooginook Merino Sheep Stud in New South Wales, which it later combined with an adjacent property. Including Pooginook, the fund's operating company, the Paraway Pastoral Company, has completed seven acquisitions.
Hornibrook's overall strategy is to roll-up existing sheep and cattle properties across Australia and generate benefits of scale associated with serving larger flocks with less labor and machinery. The ultimate goal is to aggregate a total of 300,000 cattle and 300,000 sheep in various properties across different climactic zones on the continent and to become one of the biggest cattle and sheep producers in the world.
Hornibrook said the pastoral fund is more a private equity fund than anything else.
“Ultimately, it’s an operating business supported by a tangible asset, which is land and livestock. So what we’re providing people is exposure to the operating asset and also the security associated with owning a tangible asset,” he said.
The fund has some infrastructure-like characteristics. Prices of lamb and beef have historically had a low correlation with other asset classes such as stocks, bonds and listed property and experience lower volatility, according to research conducted by Hornibrook’s team.
The fund is designed to have a five year to eight year longevity, at the end of which unitholders will have the option of publicly listing the fund or selling its assets. A trade sale is also a possibility, Hornibrook said.