PSP finds piece of Dairy Holdings too good to pass up

AUCKLAND: Canada’s Public Sector Pension Investment Board has been redirecting its primary sector investment into Australia in recent years, but buying into Fonterra’s biggest shareholder, Dairy Holdings, was too good an opportunity to miss.

‘‘Dairy Holdings Limited is a household name in the New Zealand dairy industry and their reputation as a toptier operator with exceptional scale precedes them,’’ a PSP Investments spokesman told BusinessDesk.

PSP Investments has $C168 billion ($NZ188 billion) of net assets under management and invests funds for the pension plans of the federal public service, the Canadian Forces, the Royal Canadian Mounted Police and the Reserve Force.

The spokesman did not provide any financial details but Sooke Investments — a unit of PSP — now owns a 25% stake in Dairy Holdings with 399,900 shares.

Dairy Holdings has 59 dairy farms and produces about 17 million kilograms of milk solids from 50,000 milk cows, according to its website. The Ashburtonbased farming company is

Fonterra’s largest shareholder with more than 12 million shares and the cooperative’s biggest milk supplier.

‘‘When DHL initially approached us in 2018, we recognised the unique opportunity and privilege to further expand our presence in the industry,’’ PSP said.

According to Dairy News,

Sooke bought the stake from Jagwei Ltd, a holding company for the Waikatobased Wallace family, about a year ago.

The PSP spokesman said New Zealand’s strong farming expertise and its focus on a traditional pasturecentric management regime, as well as its cost and productquality leadership in the global dairy industry, attracted it to the region.

However, ‘‘as of 2018 we, for the most part, redirected our growth efforts in dairy to Australia, where we leveraged the exceptional knowhow of our New Zealand operating partners to help us acquire and manage dairy farms in Tasmania.’’

Among other investments in Australia, in October last year PSP BidCo and Sooke Investments bought Australianlisted agribusiness Webster for $A854 million ($NZ904 million).

In New Zealand, Sooke Investments also owns a 69.05% stake in Kaingaroa Timberlands, the 190,000ha block of plantable land on the central North Island, and 100% of Global Herd NZ, a holding company PSP used to buy half a dozen dairy farms between 2014 and 2016. — BusinessDesk