30 May A Sundrop in the Ocean: World-First Tomato Farm Sold to NZ Asset Manager
Adelaide-based Sundrop Farms has been sold to the New Zealand investment firm Morrison & Co for an undisclosed amount, after a year long negotiation process.
Sundrop’s Port Augusta facility represented a global first – a purpose built greenhouse powered by solar energy and using desalinated seawater to grow up to 17,000 tonnes of Truss tomatoes each year, which are sold through Coles Supermarkets as part of a 10-year agreement.
The farm uses a ‘concentrated power tower system’ – a 127m solar tower, gathering solar from 23,000 mirror heliostats on a 51500m2 field. Producing up to 39MW of thermal energy, which is used as electricity, heating and to desalinate seawater captured from the Spencer Gulf.
The facility – which was opened in 2016 – is the world’s first commercial-scale farm to use sunlight and seawater to grow tomatoes. Costing $200 million to build, the project was funded in part by the federal Government’s Clean Energy Finance Corporation, and secured a $100 million equity investment from Kohlberg Kravis Roberts (KKR). According to the Australian Financial Review, KKR are expected to sell their stake in Sundrop Farms as part of the transaction with Morrison & Co.
The Morrison & Co Growth Infrastructure Fund also received funding ($150 million) from the Clean Energy Finance Corporation, and was developed to invest in projects with significant scope for improvements in energy efficiency. While neither party will comment on the price, it is expected that the sale is valued at between $200 and $250 million.
Morrison & Co currently manage more than US$10 billion in assets around the world including Australia, New Zealand, China, the UK and America. Their Australian assets include airports, education and student accommodation facilities, retirement assets and energy plants. While the company does have existing investments in renewable energy projects, the acquisition of Sundrop Farms marks the company’s initial investment in agriculture, and is believed to be the first purchase made under the Morrison & Co’s $1billion Growth Infrastructure Fund.
“We’ve been looking for a long time to participate in the food and agriculture supply chain and Sundrop is a great example of that,” said Paul Newfield, Chief Investment Officer at Morrison and Co.
“We’re excited about this as our first investment and we see it as a space where there will be a lot of opportunity for growth.”
Rumours that the facility has not been operating at its peak have lead to suggestions of a reduced sale value, however this has been denied by Suncorp SEO Steve Marafiote.
“I think those claims [of underperformance] are relatively unfounded — the business is performing well and yields performances are increasing over time,” he said.
According to Mr Marafiote, the timing of the sale of shares by KKR is coincidental, and not a sign of investor regret.
It’s more a cycle of the property equity that was in from the start. KKR were involved for a long time and they sat with their normal holding period, it was a normal transition for them.”