Life-long sector experience shapes our strategic investment approach

Blue Sky’s Real Assets team has many decades of experience across a range of Australia’s agricultural industries.  We apply our knowledge, networks and insights to make long term investments in Australia’s agriculture sector. The team has established itself as an innovative and pragmatic agricultural investment manager, achieving overall returns of 23.2% p.a.1 (net of fees in the five years to 30 June 2018 including the Water Fund).

“Returns for Australia’s agricultural sector are often challenged by the inherent variability of climate and commodity prices, yet from experience, we know that access to reliable irrigation water can change the game.”
Kim Morison, Blue Sky Real Assets

1. Past performance is not a reliable indicator of future performance.

 

Our Real Assets

Water Entitlements

Our thesis is to own the critical input and most limiting factor to Australian agriculture production: water.

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Water Entitlements

Blue Sky well understands that fresh water is the most limiting factor for the expansion of Australia’s agricultural sector; it is the lifeblood of our food and fibre production. Australia enjoys the most advanced regulatory framework in the world that has been set up to allocate scarce water amongst competing users, whilst preserving sustainable environmental water flows as a priority over consumptive use.

 

Australia’s bi-partisan National Water Initiative (2007) has led to the development of secure and relatively liquid markets for the trade of scarce water. Successive Federal and State Governments have continued to recognise and encourage a growing trade in water such that it will be allocated amongst competing users according to their ability to generate the highest economic returns. As a result, the Murray–Darling Basin is the world’s largest ‘cap and trade’ water market.

A Water Entitlement is a perpetual or ongoing right to access a share of annual water supplied from a specified water resource such as a river or underground aquifer.

Blue Sky’s Water Fund invests in the ownership and on-going management of a portfolio of Water Entitlements.  In turn, this provides a new source of capital for Australia’s agricultural sector; new water risk management tools for irrigators; increased liquidity in water markets; and allows investors to participate in returns from Australia’s agricultural sector.

Agribusiness Private Equity

We invest capital alongside proven operators in high growth agribusinesses to drive earnings growth through increased efficiency, expansion, redevelopment (‘change of land use’) and/or repositioning underlying assets.

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Agribusiness Private Equity

Blue Sky applies a ‘private equity’ approach to agribusiness and farmland investment. We invest growth capital in private, family owned companies with a track record of profitable farmland asset management in order to assist them to expand, redevelop agricultural assets, and achieve greater productivity and higher returns.

We target assets that provide the opportunity to achieve high levels of capital growth on exit and investments that will be supported by on-going annual yields during the investment period.

We believe that investing capital alongside proven operators to drive earnings growth through increased efficiency, expansion, redevelopment (‘change of land use’) and/or repositioning underlying assets provides the best opportunity to derive competitive returns.

Agricultural Infrastructure

We invest in assets that provide stable yield without a first-degree exposure to annual commodity price volatility experienced by farmland operators.

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Agricultural Infrastructure

Investments in Australian agricultural infrastructure represent a unique opportunity to derive financial returns from the ownership and management (predominantly via leasing) of key supply chain infrastructure engaged in the growth of Australia’s agribusiness sector. This includes strategic investments in water pipelines, commodity storage, processing and packing facilities, integrated production infrastructure and value-add food and fibre processing facilities.

 

We believe Australian agricultural infrastructure will generate long-term and competitive yields driven by increased demand for agri-food products and subsequent growing volumes of production (in line with population growth) that need to be stored, moved and processed.

Investors in Blue Sky’s agricultural infrastructure strategies provide investment capital for the development of Australia’s regional infrastructure and facilitate the growth of our export-competitive agriculture sector.

The Blue Sky Water Fund

The Blue Sky Water Fund invests in Australian Water Entitlements and is managed by Blue Sky’s Real Assets division, Blue Sky Water Partners Pty Ltd (‘BSWP’). Water Entitlements are perpetual titles issued and registered with state government titles offices, which represent the right to be allocated a share of the annual capacity of a particular water resource; a regulated river system or aquifer. The Water Fund was established in 2012 to invest in a portfolio of Water Entitlements, to derive annual income from the sale of water allocated to the entitlements each year and to lease Water Entitlements to irrigation farmers over the medium-term.