As Australian agribusiness transactions continue to evolve in their sophistication, banks are logically positioning themselves to better support farmers and families.
Certainly a change has occurred, and it seems the days of heavy handed revaluations leading to distressed sales via hungry receivers are rightly diminishing. Smart banks are better understanding that they can achieve the reduction of capital exposure by better effectively marketing the sometimes generational advantages many farming enterprises have built over the years of hard work, industry positioning and important industry reputation.
The value of a farmer’s knowledge and industry knowhow should never be discounted is the cry of sophisticated investors in contact with Smith Agri International. In fact through regular engagement with international institutional investors, Smith Agri International highlights that emerging fund managers are the first to recognise the benefits (value) of keeping a good farmer on the ground doing what they do best. Many times it’s a bank that has in fact eagerly overcapitalised the farm assets in boom times, then through a possible disconnect unwittingly placed undue pressure on the farm following typical cyclical downturns.
Yet, the opportunity clearly exists to better engage with the farmer and family through the launch of a sophisticated and mutually beneficial offering that entices new investment capital and a common partnership, aimed at delivering the correct balance of debt, equity and incentive. Stabilising the farm assets and better modelling future opportunities can even be the catalysis for expanding the enterprise to new heights. Backing ones aspirations for future family prosperity or generational change is often aligned with new investor goals.
Smith Agri International is in continual contact with existing and emerging institutional investors, in particular those located in North America and Europe, many keenly looking for the next good agricultural investment target within the low sovereign risk environment of Australia, and as with most remote investors they certainly understand the benefit of aligning their goals with good sound local farming management knowledge. From time to time, a strategic alliance can provide the farmer with the ability to expand their management capabilities to a broader aggregation of ‘of-like’ property ventures delivering the farmer and next generation significant upside and security. Aligning the future goals of traditional farming families and eager capital is not as hard as it may seem.
Smith Agri International highly values our day to day interaction with farmers, banks, associations, investors and communities. We see enormous opportunity in 2016 in supporting targeted agribusiness offerings that deliver important injections of capital whilst keeping farmers on the ground to the mutually benefit of the farming enterprise. Gone are the day’s (we hope) of banks grabbing that lowest hanging fruit, simply because that expensive independent valuation assumes inequity, ignores true farmer value and likely investor appeal. Certainly the smart money from emerging international investors highlights a willingness to effect positive change.
For more information, feel free to contact Smith Agri International; +61 (0) 418 332 780, or check out our Capability Statement which can be viewed on our website: www.smithagriinternational.com.au