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Dollar deal$With a positive investment outlook for the food and agribusiness sector, RSM asks: are you investment ready?
BY JUSTIN AUDCENT CORPORATE FINANCE PARTNER, RSM PERTHWith United Nations modelling showing the global population reaching 8 billion this month, and the impact of the COVID pandemic and war in Ukraine highlighting our reliance on global supply chains, food security and supply continue to drive investment into the food and agribusiness sector. The premium nature and quality of our produce, strong biosecurity standards and low geopolitical risk combine to make Australia (and New Zealand) an investment destination of choice.
Inbound investment continues to be driven primarily by securing product for export markets within both the branded food and beverages and primary production segments. However, several global players are seeking to build vertically integrated agribusinesses from pre-farm gate through to processing and export.
Domestically, we see continued consolidation within some segments, while high-net-worth families and financial investors are also active. Private equity funds, with a short- to medium-term investment horizon, generally avoid the risks associated with primary production, but remain active investors in food and beverage companies with a strong brand, which they see as both defensive and growth investments. We are also seeing private debt funds – both in Australia and offshore – being more prominent in funding agribusiness, providing greater leverage than the major banks are able to offer, albeit at higher lending margins.
A major growth area has been investment into agri-tech businesses, providing a wide range of science- and technology-based solutions ultimately focused on increasing efficiencies and maximising agricultural yields. Global investment in this segment has grown from US $3b in 2017 to more than US $10b in 2021, of which 25% was in the Asia-Pacific region.
“ Global investment in [the agritech] segment has grown from US $3b in 2017 to more than US $10b in 2021, of which 25% was in the Asia-Pacific region. ”For businesses seeking investment and looking to take advantage of these opportunities, it is essential to be ‘investor ready’ (see sidebar). This requires an initial understanding of the investment landscape, including who the likely investors will be, their investment objectives and therefore how to pitch successfully to them.
See our four tips on this page to becoming ‘investment ready’. Like RSM, your existing accountants/ advisors and State Governments/ industry bodies, such as vegetablesWA, will also provide either ‘investor ready’ programs, grant funding or be able to point you in the direction to seek advice in this regard.
Are you investment-ready?Follow our four tips to become a compelling investment proposition.
1 Write up a clear business plan that outlines your growth and investment plans for at least the next three to five years, including: the amount of funding required, how it will be deployed and demonstrating clearly how this will drive expansion.2 State how you differentiate your business in primary production, this may be related to technology and innovation in your farming practices, while for other businesses it is often associated with a brand, marketing strategy and/or expansion of the product range.3 Understand the risks in your business and the extent to which these have been or can be mitigated.4 Draw up an investable corporate structure (many businesses are set up to be tax effective for the current owners in a way that is not suitable for an external investor).MORE INFORMATIONContact Justin Audcent via email on email@example.com.