19/03/2013 - 21:53

ITC forestry team returns

19/03/2013 - 21:53


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ITC forestry team returns

AN investment group backed by private equity player KKR, and forestry veterans Tony Jack and Bob Bunning, is set to become the second largest owner of Indian sandalwood plantations in the Ord River region, after winning grower support for a deal with agribusiness Elders.

Growers in 14 managed investment schemes voted last week to support the $70 million sale of their schemes to Western Australian company Santanol.

The deal covers 1,750 hectares of plantation previously managed by Elders, which is returning to its roots as a rural services business.

The vote on a 15th small scheme (covering 4ha) was adjourned due to lack of attendance, and will be resumed later this month.

The Elders deal will add to 370ha Santanol has already acquired or established.

Mr Jack previously headed MIS group Integrated Tree Cropping, which was progressively acquired by Elders (then known as Futuris) in the early to mid 2000s.

He came to prominence again in 2009 as head of another private investment group, Black Tree, which sought to buy a number of forestry assets from failed MIS managers Great Southern and Rewards.

Mr Jack told WA Business News that Santanol had no connection to Black Tree, which counted industrialist Gordon Martin and market gardener Nick Tana among its backers.

Santanol is backed by the same group of people that helped Mr Jack establish ITC as one of the early players in the plantation sector in the mid 1990s, including Mr Bunning, Albany investor Bruce Mattinson, and Bernie Dell.

A major international private equity player, KKR’s involvement is a reflection of the scale of the latest deal.

The grower support for the Santanol proposal came despite an 11th hour bid by Hamilton Securities to win support for its alternative deal, which was still under development at the time the vote was taken.

Mr Jack said sandalwood projects were not suited to retail MIS investors, because they need intensive management and continuous investment.

“These crops don’t suit the retail space of MIS,” he said.

“The management of sandalwood is more like horticulture.

“It’s a constant activity and therefore you need to constantly put money into it.”

Mr Jack said the first of the sandalwood plantation was due for harvest in three or four years.

The largest manager of sandalwood trees in the Kimberley is ASX-listed TFS Corporation, which has 6,500ha of established trees.



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