The investment firm Morrison & Co has acquired the Australian greenhouse company Sundrop Farms. No figures have been released around the sale of the 20 hectare facility, that was completed in 2016 and uses over 23,000 tracking mirrors to purify saltwater into irrigation water.
The commercial facility cost about $200 million to build, with private equity firm Kohlberg, Kravis and Roberts (KKR) investing $100 million. Now the Morrison & Co owns the tomato growing facility. Morrison & Co is an alternative asset manager focusing primarily on infrastructure, private equity and property investment with offices in New Zealand, Australia and Hong Kong. This investment is their first in horticulture and makes Sundrop the maiden asset in their new investment fund that targets "growth infrastructure".
"We've been looking for a long time to participate in the food and agriculture supply chain and Sundrop is a great example of that," Paul Newfield with Morrison & Co said to the Australian newspaper ABC in comment on the sale.
The facility was realised turn-key by Van der Hoeven Horticultural Projects
Australian publications value the deal up to $250 million, with negative facility performance noted as a factor impacting its value. "I think those claims [of underperformance] are relatively unfounded — the business is performing well and yields performances are increasing over time", Steve Marafiote, CEO with Sundrop, says to an Australian publication.
He said the sale had nothing to do with investor concerns about Sundrop's model or technology. "It's more a cycle of the property equity that was in from the start. KKR were involved for a long time and they sat with their normal holding period, it was a normal transition for them."
Last year Steve explained how the company was looking for new investors. "The farm has been successfully operating for almost two years and as a result we’re seeking new partners with whom Sundrop can embark on its next stage of exciting growth and bring our highly sustainable farming operations to new products and regions,” he said.
Sundrop Farms is one of the most talked about greenhouse projects of the last years. The Australian farm uses a desalination plant and a solar field with more than 23,000 tracking mirrors to purify saltwater into irrigation water. After a trial instalment was erected in 2010, the 20 hectare facility opened in Port Augusta in 2016. Sundrop Farms, has a 10-year offtake agreement with the national grocery supermarket chain Coles to take all the tomatoes produced.
In the last couple of years the company has been realising pilot plants in Portugal and Tennessee, US. These were sold. According to Paul Newfield, the Port Augusta facility is the fund's top priority over the pilot plants. He says no changes are to be expected at Port Augusta. "We can bring capital and confidence into the future rather than any changes in operations."