Singapore Ag company sells 89,085 megalitres of Australian water to Canadian pension fund
Liberal and Labor party deregulation of farm water allows this profiteering of $311M for foreign companies which pay little or no Australian tax. How much longer will Australians put up with this sell-off of our natural assets, particularly water
SINGAPORE (THE BUSINESS TIMES) – A unit of Olam International is selling 89,085 megalitres (about 89 billion litres) of its permanent water rights in Australia to a related entity of the Public Sector Pension Investment Board (PSP Investments), one of Canada’s largest pension investment managers, for A$490 million (S$452.7 million).
The deal is expected to be completed in December 2019, whereupon Olam will receive cash proceeds of A$490 million. The agri and food giant is also expected to book a one-time pre-tax capital gain of about A$311 million.
Separately, PSP Investments has agreed to buy about 12,000 hectares of almond orchards and related assets in Victoria, Australia, that were previously leased to the Olam unit, Olam Orchards Australia (OOA).
Both the almond orchards and the associated water rights will continue to be operated by the subsidiary, said Olam.
OOA has entered into a new, tiered revenue sharing arrangement with PSP Investments for the almond orchards, related assets and permanent water rights. Under this arrangement, OOA will pay PSP Investments a share of revenue from the almond orchards.
The agreement is for an initial period of 25 years with options to renew for another 25 years.
Olam’s managing director and CEO of edible nuts Ashok Krishen said: “Consistent with our asset-light approach to tree crop production, this arrangement will enable Olam Orchards Australia to focus on operations and continue to deliver best-in-class products and services to customers.
“I am confident this partnership with PSP Investments will help lead the industry in sustainable farming and agricultural practices, and protect critical natural resources, such as water in Australia.”
In addition to the sale of its permanent water rights in Australia, Olam is in discussions to divest and/or restructure various assets and businesses in line with its strategic plan. Some of these deals may conclude in this financial year, said Olam.