Olam to sell some Australia water rights to PSP Investments for A$490 million

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Olam International’s wholly owned subsidiary Olam Orchards Australia (OOA) has entered a deal to sell 89,095 metaliters of its permanent water rights in Australia to a related entity of Public Sector Pension (PSP) Investment Board for A$490 million, or around US$332.5 million, the agri-business said in a filing to SGX Tuesday.

In a separate deal, PSP Investments, one of Canada’s largest pension investment managers, agreed to acquire around 12,000 hectares of almond orchards and related assets, previously leased to OOA, in Victoria, Australia, the filing said.

OOA will continue to operate both the almond orchards and related water rights, Olam said.

Under the deal, OOA will enter a revenue sharing agreement with PSP Investments, paying a share of the orchards’ revenue for an initial period of 25 years, with options to renew for another 25 years, Olam said.

“Consistent with our asset-light approach to tree crop production, this arrangement will enable Olam Orchards Australia to focus on operations and continue to deliver best-in-class products and services to customers,” Ashok Krishen, Olam’s managing director and CEO of edible nuts, said in the statement.

“I am confident this partnership with PSP Investments will help lead the industry in sustainable farming and agricultural practices, and protect critical natural resources, such as water in Australia,” Krishen said.

Marc Drouin, managing director and head of natural resources at PSP Investments, said the deal was in line with his company’s strategy to invest in high-quality agricultural assets globally.

“It is also quite complementary to our existing permanent crop investments around the world and represents a unique avenue to add scale, particularly in Australia,” Douin said.

The deal is expected to be completed this month, the filing said.