Regenerative agriculture real asset manager SLM Partners has listed its Australian pastoral portfolio for sale as it winds down its SLM Australia Livestock Fund. The company has pioneered the regenerative agriculture investing space since its founding in 2009 and today has more than US$750 million in assets under management through funds and separate accounts across USA, Europe and Australia and through strategies that address croplands, perennial crop systems, grasslands and forestlands. With this longevity in the space, SLM Partners is among the first regenerative agriculture funds to go through the full cycle of capital raise, deployment, 10+ years of operations, and now exit.
The company’s first strategy, SLM Australia Livestock Fund, was launched in 2012 with a final close in 2015. The fund invested over AU$75 million across rangeland properties in Queensland and New South Wales with a focus on grass-fed beef cattle production. Spanning approximately 284,924 hectares across southwest Queensland and northwest New South Wales, the portfolio presents a rare opportunity to secure a turnkey, institutional-scale regenerative grazing enterprise with established carbon projects.
With a deep understanding of both the global challenges presented by soil degradation, biodiversity loss, water depletion, and climate change, the team at SLM Partners manages their land assets using proven systems and strategies to address these challenges. The practices not only work to restore and soil health, biodiversity, water, and carbon sequestration but they increase the resilience of the land. In turn the land can be more profitable by producing higher yields, reducing costs, and tapping into premium markets or monetizing environmental benefits. The approach was no different in Australia and the results have been impressive – the portfolio boasts positive environmental and productivity outcomes, paired with carbon credit revenue, strong livestock genetics, and significant infrastructure improvements for water management and successful livestock rotation.
Delivering on Positive Environmental and Productivity Outcomes
Over the past 13 years, the Australian pastoral portfolio has undergone extensive capital development to implement a regenerative cell grazing system that optimizes production capacity while delivering independently verified positive impacts on biodiversity and land condition.
Approximately 4,000 kilometers of fencing across the five aggregations has created about 1,100 new paddocks to facilitate stock rotation, supported by approximately 500 kilometers of new piping to supply approximately 150 water points. Each new water point has sufficient flow to provide water for approximately 4,500 adult equivalents (AE) at any time, representing a major improvement in water across the Portfolio.
Infrastructure and livestock from SLM Partners Australian portfolio. Source: SLM Partners
SLM Partners’ General Manager in Australia, Graham Finlayson explains that SLM is an industry leader in commercial beef breeding and land regeneration, with its rotational grazing making the Portfolio resilient to weather events.
“Cell grazing has allowed us to ride out dry spells and make the best use of rain when it arrives,’ said Finlayson. “The land is in terrific condition now and we see plenty of room for further improvement. SLM has had a strong focus on increasing the perennial grass base across the aggregation over the past 12 years, which has improved the drought resiliency of the production system immensely.”
He adds, “The commercial breeding program, high standards of animal welfare and stock-handling, policies, procedures and efforts in regenerating the land-base are second to none in the industry. And in a world where these things are often talked about but rarely done properly, we have been leaders in these fields for over 12 years.”
In addition, SLM Partners was an early proponent of carbon project methodologies approved by the Australian Government’s Carbon Farming Initiative. The Portfolio has two carbon projects generating and selling ACCUs until at least 2039. These projects will be sold and transferred to the new owner as part of the transaction and align with the regenerative grazing system, allowing for simultaneous cattle production.
SLM Partners Global Managing Partner Paul McMahon said the firm was proud of what they had achieved in Australia.
“We are proud to have helped scale up regenerative grazing and carbon storage in this unique Australian landscape,” McMahon said. “Well-managed, pasture-based livestock production has the potential to produce highly nutritious food with a low or negative carbon footprint.”
Genetics Key Focus in Cattle Production
With the Portfolio’s average historical carrying capacity of approximately 15,000 AEs, approximately 13,000 cattle, which have benefited from a focus on genetic optimization, are being offered as part of the sale.
SLM has predominantly used Pharo Australia Angus bulls, with Rangelands Angus/Composites also in its program, and incorporated some Lasater Beef Master genetics from the United States through an AI program.
Nutrien Harcourts Managing Partner, Greg Seiler, currently manages the livestock transactions for the Portfolio and said an outstanding and experienced management team was in place. “Each aggregation is led by a separate management team responsible for anywhere between 2,500 to 4,000 cattle at a time, depending on season conditions and stocking rate,” Seiler said. “All operational staff are trained in low stress stock handling techniques, and the cattle are renowned for their extremely calm temperament given how frequently they are rotated through the grazing system.”
Productive Soils, Water Security and Strategic Capital Expenditure
The Portfolio comprises a range of productive soil types and topographies supported by summer-dominant annual rainfall of approximately 370 millimeters.
Artesian groundwater bores feed multiple watering points via an extensive underground polyethylene pipe network. Further water security provided by frontage along the Thurrulgoonia, Eunama, Owangowan, Tuen and Werri Creeks and Ledknapper watercourse allows the aggregations to benefit from low level flooding.
Custom designed cattle yards were installed across all properties between 2013 and 2015, with further improvements including shade installations, water points and hydraulic cattle crushes to assist with the safe handling of large numbers of animals.
Significant capital has been invested in fencing, including extensive internal and external exclusion fencing, to support cell grazing and mitigate risks posed by feral animals and pests. All aggregations are fenced to boundaries with internal fencing comprising a mix of plain and barbed wires on steel and timber posts.
The aggregations are supported by high-quality and often new infrastructure, including workshops, storage and machinery sheds and two aircraft hangars situated at Padua Park. A variety of accommodation is located across the aggregations, including several large homesteads, cottages and a range of workers’ quarters.
An Opportunity for Buyers & The Regenerative Agriculture Space
“It’s not often a portfolio of this scale and caliber comes to market, and we are expecting significant interest from domestic and global institutional investors, corporates and large family enterprise looking to expand their livestock operations,” says Danny Thomas, Senior Director at LAWD, who is working on the sale. He describes the portfolio as “extraordinary asset as it stands following the significant capital investment made by the vendors, however there remains scope for the new owner to further grow the enterprise by stocking at higher rates and accessing higher-value, regenerative grass-fed market channels.”
While the portfolio offers a tremendous opportunity to acquire valuable, resilient, and regenerative assets for potential buyers, it also brings something more to the regenerative agriculture space: another building block for the case for regenerative agriculture investing. SLM has played a key role in developing and articulating the case for regenerative agriculture investing over the course of the past 10 years. The team wrote the foundational white paper on the topic back in 2016 and then released an updated version, Investing in Regenerative Agriculture: Reflections from the Past Decade, a year ago, which is packed with learnings directly from their work. With SLM Partners now well into their second decade of work, the space as a whole will have the benefit of learning from their experience through this next milestone in fund execution – the exit. No doubt this experience will provide key lessons to inform SLM’s work and those working and investing in the space for years to come.