ONE of the largest diversified agricultural portfolios in New South Wales will return to the market after equity market volatility caused the $780 million deal to fall over.

In September 2023, after 30 years of investing in agriculture, the privately owned Australian Food & Agriculture Co released plans to offload 13 NSW farms spanning 225,405ha, with hopes of raising about $700M.

Just under a year later, it was announced that the NASDAQ-listed and Cayman Island incorporated Agriculture & Natural Solutions Acquisition Corporation (ANSC), a special purpose acquisition company, had entered into an agreement to acquire the portfolio.

ANSC is backed by specialist agricultural investment and management firm, Impact Ag Partners, and asset management firm, Riverstone Holdings LLC.

Both are US-based companies, although Impact Ag Partners has an Australian offshoot with a head office in Armidale, NSW.

In a document released to the US Securities and Exchange Commission on April 11, ANSC announced the “termination” of the agreement by “mutual consent”.

No explanation was provided for the decision, although the corporation’s annual report, released on 28 March, had flagged the possibility of the agreement coming to an end.

“The parties are currently discussing the best path forward for the business combination in light of the increasingly volatile equity market conditions, including potentially mutually terminating the business combination agreement,” the report said.

The document also pointed to risks that could affect the deal’s completion, including the impact of broader market instability and volatility in capital and debt markets.

It also emphasised the potential risks of acquiring portfolios outside the US, including “higher costs and difficulties inherent in executing cross-border transactions”, tariffs and trade barriers, currency fluctuations, rates of inflation, and deterioration of political relations with the US.

AFA relisting process

The sale of the massive portfolio will once again be handled by Bell Potter, one of Australia’s leading financial advisory firms.

It is understood the owners are keen to find a buyer who will purchase the business as a whole and not as individual farms.

While there is undoubtedly a level of disappointment in what has happened, it is understood the AFA will approach parties who showed previous interest before deciding how it approaches the market in the coming days.

Future of ANSC

As a special purpose acquisition company, ANSC faces a limited lifespan unless it completes a business deal by year’s end.

In the March report, the ANSC leadership team said that the company intended “to complete a business combination before the mandatory liquidation date” of November 13.

It remains unclear whether the corporation is pursuing an alternative acquisition.

Earlier, the company indicated its business strategy would involve targeting investment in the agriculture sector with a focus on the potential of decarbonisation opportunities, such as natural capital marketplace and sequestration technologies.

“We intend to identify and execute an initial business combination within the agriculture sector in the United States or other developed countries, although we may pursue targets in any business, industry, sector, or geographical location,” ANSC said.

“We believe the agriculture sector is historically underinvested and will require substantial investment to capitalize on its potential to contribute to economy-wide decarbonization.”

AFA diversified holdings

AFA is currently owned approximately two-thirds by Bell Group Holdings Pty Limited, a private Australian company held by members of the Bell family and Alastair Provan.

It is a large-scale, diversified agricultural business established by the late Colin Bell in 1993 with the acquisition of the Burrabogie station.

Over 30 years later, AFA’s portfolio is one of the largest in NSW consisting of three major freehold title land aggregations within the Deniliquin, Hay and Coonamble districts.

The company has total livestock carrying capacity of approximately 247,000 dry sheep equivalent across its sheep wool and meat and cattle operations (excluding the Conargo feedlot).

AFA also operates the Wanganella and Poll Boonoke merino sheep studs, amongst the most highly regarded studs in Australia.

The company’s cropping operations are marked by seasonal and geographic flexibility, with key crops including irrigated cotton and rice, as well as wheat, barley, canola, corn, chickpeas and faba beans.

More recently, the company has developed the Conargo feedlot with a licensed capacity of 12,000 standard cattle units.