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QIC: ‘NAPCo not your bog-standard buyout’

The manager expects its investment in one of Australia’s largest beef producers to serve as a platform for growth.

“With the North Australian Pastoral Company (NAPCo), we're looking for operational complexity and disruption within the industry that we can take advantage of,” Philip Cummins, principal at QIC, told attendees at today's Agri Investor Australia Forum, held in Melbourne.

“NAPCo is not your bog-standard, buyout transaction,” Cummins added. “It will have a much longer time horizon, and will not have a predictable, linear type of return.”

Cummins said that, over time, QIC is expecting NAPCo to deliver low double-digit returns. “The returns will come from the real-asset component of the business as well as the operational part, as we integrate it with larger businesses,” he explained. “Part of the process is consolidation – growing the pie, diversifying revenue, and changing the quality of our earnings.”

QIC made its investment in NAPCo, one of Australia's largest beef producers, in 2016, acquiring 80 percent of the company for a reported A$400 million ($300 million; €280 million). The firm invested on behalf of an Australian superannuation fund and the British Pension Protection Fund. NAPCo owns and operates close to six million hectares of cattle stations across Queensland and the Northern Territory.

Cummins pointed out the firm sees the ability to make NAPCo bigger than it is today. Central to its strategy is the ongoing thematic around food, Asia and trade, where consumers believe in the 'clean and green' aspect of what Australia has to offer.

Cummins, however, cautioned, that Australia cannot rest on its laurels, because the global marketplace has become highly competitive. “We need to be an efficient producer. We need to do what we are doing very well.”