SINGAPORE (Dec 3): Olam Orchards Australia (OOA), a wholly-owned subsidiary of global food and agri-business Olam International, has entered into an agreement to sell 89,085 megalitres of its permanent water rights in Australia for A$490 million ($456 million).

In a regulatory filing on Tuesday, the group reported that it will be selling its rights  to a related entity of the Public Sector Pension Investment Board (PSP Investments), one of Canada’s largest pension investment managers. 

The transaction is slated for completion in December, and is subject to customary conditions. Upon completion, Olam is expected to receive cash proceeds of A$490 million and is also expected to book a one time pre-tax capital gain of some A$311.million. 

PSP Investments Managing Director and Head of Natural Resources, Marc Drouin, commented: “Our agreement with Olam Orchards Australia is consistent with our strategy to partner with best-in-class operators who take the long-term view, and 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.”

This is, however, not the only deal that PSP Investments is involved in. In a separate transaction, PSP Investments is acquiring 12,000 hectares of almond orchards and related assets in Victoria, Australia, which were previously leased to OOA. 

According to Olam, both the almond orchards and the associated water rights will continue to be operated by OOA. 

OOA has also entered into a new, tiered revenue sharing arrangement with PSP Investments for the almond orchards, related assets and permanent water rights, which will see the company pay PSP Investments a share of revenue from the almond orchards. 

The arrangement is for an initial period of 25 years, with options to renew for another 25 years. 

Olam’s Managing Director and CEO of Edible Nuts, Ashok Krishen says, “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.”