Pension fund buy-in ‘vote of confidence’ in NZ dairy

A Canadian pension fund’s buy-in to New Zealand’s biggest dairy farming operator is a sign of confidence in the country’s dairy industry, says Dairy Holdings chairman Greg Gent.

Sooke Investments, a subsidiary of one of Canada’s biggest pension funds, PSP Investments, has bought 24.9 per cent of South Island-based Dairy Holdings from an exiting shareholder.

The transaction took place last year but only showed up when Dairy Holdings filed its latest annual returns to the Companies Office. The sale price is unknown.

PSP bought the stake from Jagewi Ltd, whose shareholders were JD & RD Wallace, John Luxton and Luxton family interests and Auckland businessman Paul Benjamin.

Dairy Holdings’ major shareholder and co-founders of the company more than 20 years ago, Colin and Dale Armer, took the opportunity to lift their stake to nudge 42 per cent, while the other large shareholder Murray and Margaret Turley increased their holding to 33 per cent.

PSP, which has other agribusiness interests in New Zealand, did not have to seek Overseas Investment Office approval for the purchase because it was under 25 per cent.

Dairy Holdings’ annual revenue is estimated to be around $96 million.

It produces around 16 million kg of milksolids a year and has assets of more than $1 billion, milking 55,000 cows over 75 dairy and grazing farms.

Dairy Holdings is Fonterra’s biggest shareholder.

Gent, like Colin Armer, a former Fonterra director, said PSP — with its long-term view of agribusiness — was a good fit for a company with two intergenerational families as major shareholders. “They’re big enough to see through commodity cycles ... and taking a shareholding is a vote of confidence in Dairy Holdings and the New Zealand dairy industry.”

Armer said PSP was welcomed as a solid, long-term shareholder which shared the company’s vision and strategy, which is based on farming using the natural resource of grass.

PSP has a seat on the Dairy Holdings’ board and had proven itself a good corporate citizen, Armer said.

PSP has been approached to discuss the investment.