MIS investors out, US institution in for TFS
Listed agribusiness company TFS Corporation is seeking institutional investment to fill the hole left by the exodus of agribusiness managed investment scheme (MIS) investors.
While TFS, like many other agribusiness investment companies, had been heavily reliant on annual MIS sales, executive chairman Frank Wilson said the group was now looking to source its income from "predominantly more stable" institutional and private sector investors.
Supporting the shift from retail to institutional inflows, the group has signed an investment management agreement with an unnamed US-based institution. The deal is still subject to Foreign Investment Board approval, but if successful could be worth up to $120 million for TFS over the next six years.
The agreement would initially see TFS manage a 180-hectare Indian sandalwood plantation, to be planted in the 2010 financial year, on behalf of the US institution.
TFS' statement to the Australian Securities Exchange said the investment over the life of the plantation (excluding performance bonuses) was anticipated to be around $20 million.
The deal also includes an option to plant an additional 180 hectares per annum over the next five years, which could equal investment of $100 million.
TFS is forecasting more than 500 hectares of non-MIS sales in the 2010 financial year, almost double what it procured in non-MIS sales in the 2009 financial year. Wilson said the group's intention to restructure its products to attract institutional investors had been validated "in the wake of the MIS market fallout".
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