NZ fresh produce giant tempts Aussie agribusiness investors
The potential sale or break-up of one of New Zealand’s biggest fresh produce players, T&G Global, is catching interest in the Australian agribusiness investment community as the company faces financial pressure.
Listed on the New Zealand exchange with a $NZ200 million ($185 million) market capitalisation, the company grows directly and partners with more than 700 growers to market, sell and distribute fruit and vegetable in more than 60 countries.
But its future is uncertain. Its auditors say there is a material uncertainty over the produce giant’s ability to continue as a going concern because its current liabilities exceed its assets, according to its annual accounts filed this month.
The cause of its woes is the financial strife at its major shareholder, Germany’s BayWa, a Munich-based trader of farming supplies and produce which is struggling with high borrowing costs, forcing it to pursue a major restructure, including job cuts.
BayWa owns almost 74 per cent of T&G Global and also is a lender to the New Zealand group. The fall in BayWa’s net worth triggered the breach of a debt covenant at T&G Global, whose banks granted a waiver to rectify the breach until March 31. The grace period has been extended to April 30.
More significantly, BayWa flagged plans to sell as much as $7 billion worth of its offshore investments, including its stake in T&G Global, as part of its global restructure.
T&G Global has appointed a prominent New Zealand corporate advisory firm, which is expected to conduct a strategic review of its options.
“Last year, BayWa AG announced it is undertaking a transformation of its business,” a T&G Global spokesperson told The Australian Financial Review.
“As part of this, they shared a number of potential measures, including envisaging the sale of major holdings outside of Germany. While no decision has been made about BayWa AG’s shareholding in T&G Global, we have engaged Craigs Investment Partners to work with us in the event a decision is made at some stage in the future.”
‘Ripe for private equity’
The review could potentially consider divestment of parts of T&G Global’s production, distribution and marketing business, according to industry sources.
Combined with its debt, T&G has an enterprise value of about $400 million to $500 million, and its shaky situation may pique the interest of Australia’s institutional investors, one of whom described it as “ripe for private equity”.
As Australia’s agribusiness sector is consolidating, with increasingly large, well-capitalised operators including Premier Fresh, created through the merger of LaManna and Premier Fruits, Perfection Fresh, and Costa Group, which was bought out by US group Paine Schwartz last year.
Fund managers such as Roc Partners and Macquarie Asset Management have also established large agribusiness holdings.
Private equity has poured into the sector through headline deals such as Macquarie taking a $175 million controlling stake in Fresh Produce Group last December.
Ontario Teachers’ Pension Plan has acquired potato and onion grower Mitolo Group, orchards owner Pomona Valley, and avocado producers Capel Farms and Jasper Farms, among others. Singapore’s Temasek, along with another Canadian fund, PSP Investments, paid $500 million for calypso mango, tomato and berry grower Perfection Fresh.
One of the sector’s busiest investors is Roc Partners, now in a bidding war for ProTen, the $1 billion-plus chicken farmer owned by industry superannuation fund Aware Super. Its investments in food and agriculture include Wagyu beef business Stone Axe, greenhouse tomato grower Flavorite, Sydney rock oyster producer Australia’s Oyster Coast and Lachlan River Almonds.
With all that recent deal making in the local sector, the travails at T&G Global could also put it in play for Australia’s big agribusiness players.
From its origins in an Auckland fruit and flower shop almost 130 years ago, T&G Global – previously known as Turners and Growers – has evolved to become a dominant player, with revenue of $NZ1.36 billion last year. It posted a $NZ9.9 million loss – an improvement from the previous year’s $NZ46.6 million loss – in the last year as it recovered from the devastating effects of Cyclone Gabrielle.
With a 2000-strong workforce, T&G Global’s business ranges from growing apples, tomatoes, citrus and blueberries to packing, distributing and marketing fruit around the world, from New Zealand, Australia and the Pacific to the UK and Europe, the Americas, Asia and Africa.
Its second-biggest shareholder with 19.9 per cent is Chinese fruit distributor Golden Wing Mau Agricultural Produce Corporation, which bought its stake in 2016.
