October 27, 2023

A new wave of private credit opportunities


Banks at capacity limits, flat asset growth and less income certainty in Australian agriculture is driving a new wave of private credit opportunities

We’ve lowered our attachment point against our secured assets from a weighted average LVR of 61% to 57%; and

We have specific sector selection and diversification. For example, our portfolio exposure in farmgate dairy has reduced to <1%, down from approx 12%. We’ve reallocated to downstream industrial dairy assets (milk processing and beverage packaging assets) where there’s an infrastructure and technology value-add by producing products that sell at a 100x the farmgate milk price (high value nutrients and proteins such as lactoferrin and alpha-lactalbumin).

$90m loan secured by northern territory cattle grazing land and carbon at a 50% LVR and IRR* of 11.9%;

$20m loan secured by Western Australian blue gum plantation and mixed farming assets at a 50% LVR IRR* of 9.5%;

$60m loan secured by small crop farms with high reliability water at a 51% LVR and IRR* of 11.6%; and

Source: Rural Bank, Mid-Year Australian Farmland Values update 2023

* The internal rate of return (IRR) is a metric used in financial analysis to estimate the profitability of potential investments

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