Key role for Hartman driving Tattarang plans

31/08/2020 - 09:00

Bookmark

Upgrade your subscription to use this feature.

As the chief investment officer at Andrew Forrest’s private company, 34-year-old John Hartman oversees a very large, extraordinarily diverse and fast-growing portfolio.

Key role for Hartman driving Tattarang plans
John Hartman joined Andrew and Nicola Forrest on the Tattarang board in June. Photo: Gabriel Oliveira

A walk through the open-plan offices at the Old Swan Brewery on Mounts Bay Road provides just a hint of the scale of Andrew and Nicola Forrest’s private interests.

About 200 people work there, split between private company Tattarang (formerly Minderoo Group) and the philanthropic Minderoo Foundation.

Both operations have grown rapidly in recent years, in line with the Forrest family’s expanding wealth.

The Forrests have donated $2 billion to the Minderoo Foundation, which spent $75 million on eight different projects last year.

Tattarang has also expanded.

It has gradually topped-up its holding in iron ore miner Fortescue Metals Group, to 36 per cent.

In addition, Tattarang has established six operating businesses, employing more than 1,000 people across agribusiness, energy, property and hospitality.

Chief executive Andrew Hagger heads the team running Minderoo and Tattarang.

Working alongside him is chief investment officer John Hartman, whose low public profile belies his senior role.

Mr Hartman’s prominent position was confirmed in late June when he was appointed a director of Tattarang.

He is one of just three directors on the Tattarang board, alongside the Forrests.

 

In his first major interview since joining the group eight years ago, Mr Hartman played down the board appointment.

“I wouldn’t read too much into these things, it’s a family office, it doesn’t have a typical corporate structure,” Mr Hartman told Business News.

Nonetheless, it highlights his role in guiding what has become one of the most active private investment groups in Australia.

“To understand Tattarang, you have to appreciate firstly it’s a family office,” Mr Hartman said.

“We’re not a private equity house.

“Everything goes back to the DNA and the vision of Andrew and Nicola.”

That’s reflected in the way Tattarang pursues its commercial goals.

Mr Hartman said the concept of circular capitalism was important.

Tattarang is a purely commercial group, it’s all about investment returns, but in a responsible way,” he said.

“We need to ensure our investments do not run contrary to the family’s social or philanthropic values.

“Those profits we create are able to be donated at the family’s wish.

“For a commercial person, to see any success we achieve put to such good causes, that’s what makes it so special.”

It’s not surprising that Tattarang’s approach is aligned with the way Mr Forrest built Fortescue from scratch into one of Australia’s top 10 listed companies.

“When you think about what sets us apart, firstly it’s that long-term perspective, of what it takes when you are really making a strategic investment,” Mr Hartman said.

“Secondly, it’s that entrepreneurial culture that runs through our blood.

“While we have become a big investment group, we want to think and act like a startup and not get bogged down in bureaucracy.”

Mr Hartman made clear that he and Mr Hagger were responsible for hands-on management of the group.

“We look to Andrew and Nicola as shareholders and founders for guidance and key decisions,” he said.

“Andrew and Nicola have devoted their lives in the most part towards their philanthropy, that’s their main focus, and Fortescue for Andrew as chairman.”

A second chance

Mr Hartman owes a lot to the Forrests, as they gave him a lifeline after he was convicted of insider trading and served 15 months in jail very early in his finance career in Sydney.

It’s a topic he would rather not discuss, but does not shy away from.

“I was 21 years old; I made an incredibly large mistake,” he said.

“The best thing I ever did was owning up to it, because it allows you to move forward with your life.

“You pay the price and it’s a dear one.

“I was fortunate to get a second chance, which I’ve taken with both hands.”

Mr Hartman met Mr Forrest in 2008 when his Sydney-based investment fund was one of the early institutional investors in Fortescue.

“I remember as a young person meeting Andrew for the first time and just being inspired by the journey that he was on,” he said.

“He’s probably created more value than any Australian has ever created from scratch before.”

Higher profile

Mr Hartman said Tattarang had undergone a significant change during the past year or so.

“As Tattarang has become better known, people are actively seeking us out to be an investor of choice,” he said.

Mr Hartman told Business News Tattarang was often asked how it could cover so many sectors, and cited its management depth in response.

“The way we do that is by having those [six] operating businesses and having great industry leaders in each of those areas, and then having a central investment function branded Tattarang that allocates capital and makes final investment decisions and strategy decisions,” he said, emphasising that Tattarang was not a passive investor.

“We need to bring more than just dollars to the table, we always look to add value.

“It’s something we’re all very proud of, and to be honest, we’re just getting started.”

Harvest Road Group – agribusiness

Tattarang’s largest business unit is Harvest Road Group, which employs nearly 700 people and has annual sales of $430 million.

“I’m passionate about the agriculture side because I was there on day one,” Mr Hartman said.

“When we first bought Harvey Beef, Andrew said: ‘John it was your bright idea to buy it, so now go and run it’.

“So for the first three months I was getting up at 4.30 and driving down to Harvey every day.

“I didn’t have any experience running an agricultural business.

“It was fairly daunting, having 500 meat workers staring at you and waiting to see what you are going to do next.”

Tattarang bought Harvey Beef six years ago, and Mr Hartman said it had doubled in size and tripled in profitability since.

“It was a case study in corporate turnaround,” he said.

The group invested $35 million to create a retail-ready processing room and now supplies Aldi, Costco and Coles.

It has recently started construction of an $80 million feedlot at Koojan Downs, two hours north of Perth.

“Its not only a huge development for us, it a huge development for the industry as a whole,” Mr Hartman said.

The group will be buying animals throughout the state, to support its high throughput, and will also create more domestic demand for grain in WA.

Mr Hartman said it would add 250 jobs at Harvey, taking the abattoir close to 1,000 employees. Another area of growth has been the group’s pastoral stations.

Harvest Road has grown its holdings from one to seven in WA’s north, including two adjoining cattle stations in the Kimberley it agreed to buy last month for $30 million.

The agribusiness arm is also expanding its aquaculture operations after buying Blue Lagoon Mussels, which operates in Cockburn Sound, and Ocean Foods International, which owns water leases in Albany.

Mr Hartman said the group planned to run a connected operation between Cockburn Sound and Albany to ensure year-round supply of shellfish.

Its growth plans include investing $15 million at Albany.

“It’s like when we bought Harvey Beef; it needed some capex to realise the potential,” he said.

“Aquaculture in WA is just scratching the surface now.

“We can see this huge opportunity.”

Another component of the aquaculture strategy was the recent launch of the Leeuwin Coast brand, under which the group will market its rock oysters, mussels and Akoya (oysters).

A third pillar for agribusiness, which is overseen by Greg Harvey, will be specialty grains.

Andrew and Nicola Forrest. Photo: Jessica Wyld Photography

Squadron Energy

The group’s energy business, led by former DBP executive Stuart Johnston, houses some of its most ambitious projects.

The scope of its activities is illustrated by three notable deals during the past year.

It partnered with a Sydney-based private equity group to take full ownership of ASX-listed wind farm developer Windlabs.

In a second deal, it led a venture capital series-A raising in partnership with Mike Cannon-Brookes’ family office Grok for the Sun Cable renewable energy project.

Sun Cable proposes the establishment of a giant solar farm in the Northern Territory to supply power to Indonesia, something Mr Hartman describes as an audacious investment.

“That only requires four world firsts to be successful: the longest undersea power cable, the deepest, the world’s biggest solar farm, and the world’s biggest battery,” he said.

“If we can achieve those four world firsts, we will have an incredible project that will redefine the way people think about renewable energy.”

Squadron’s third major project is the Australian Industrial Energy LNG import terminal at Port Kembla, south of Sydney.

“Probably the most strategic piece of energy infrastructure currently on the cards in Australia,” Mr Hartman said.

The project is backed by Squadron along with Japan’s Marubeni Corporation and JERA Co, a joint venture between two of Japan’s largest electricity companies.

Costing an estimated $250 million, it provides a cost-effective alternative to the east-west gas pipeline often touted as a solution to the east coast’s gas supply issues.

The LNG terminal on its own will be able to supply 75 per cent of NSW’s gas needs.

“They’re the sort of projects we’re proud to be quietly delivering,” Mr Hartman said.

More generally, he said Squadron illustrated the group’s wide capability.

“In one year, you’ve got the most strategic piece of energy infrastructure in Australia, we’ve led a venture capital series-A raising, and a scheme of arrangement for an ASX-listed company,” Mr Hartman said.

“We’re fortunate that we’re able to play throughout the capital stack, and pivot between infrastructure and venture capital and private equity.”

Fiveight – property

Tattarang recently recruited former Lendlease and Mirvac executive John Meredith as head of its property development arm, Fiveight.

“Property is a big focus, you will see us being more and more active in the market,” Mr Hartman said.

“West coast commercial, industrial and residential property development is a strong focus, but also the east coast markets.

“We will continue to diversify away from purely WA property exposure.”

Fiveight’s existing assets include apartments at Port Hedland and Karratha.

A substantial project under way is Roe Highway Logistics Park, in which Tattarang owns a 50 per cent stake in joint venture with Adrian Fini and Ben Lisle.

A smaller, but notable, investment was its purchase of the Old Swan Brewery building.

One of its biggest opportunities is the redevelopment of the East Perth power station site.

The East Perth power station site. Photo: Gabriel Oliveira

Tattarang’s joint venture with Kerry Stokes’ private company Australian Capital Equity was named in April as preferred proponent.

“That site has been sitting there for far too long undeveloped,” Mr Hartman said.

“The most exciting part is that the public will have access for the first time in decades.

“The turbine hall is an incredibly unique space.

“It’s a multi-decade project between activating the power station at the front and future development sites at the back.”

The government said the project had an expected stage-one investment of $218 million over the next four years.

That is likely to be dwarfed by the stage-two development of high-rise apartments on the land behind the power station.

Z1Z – hospitality

Like every other part of Tattarang, the group’s hospitality arm has ambitious goals.

“Within a couple of years we will become one of the larger accommodation and food and beverage operators in WA,” Mr Hartman said.

“We want to create really unique consumer experiences.”

Tattarang’s best-known initiative is the planned redevelopment of the Indiana Tea House overlooking Cottesloe Beach.

Mr Hartman said the group was hoping to lodge a development application for the site in the next few months.

Its largest development is an $85 million eco-resort at Exmouth, where it bought 40 hectares of oceanfront land.

“It will be the biggest investment in north-west tourism since Lord McAlpine developed Broome,” Mr Hartman said.

The resort is expected to directly support 160 new jobs, and will include a caravan park, villas and a hotel, and a lodge for people on surfing and fishing trips.

“It will suit people on all budgets, it’s very exciting,” Mr Hartman said.

Another substantial project is the planned development of a 100-room hotel at the Spicer site near Fremantle markets.

On a much smaller scale, Tattarang is planning to open a restaurant at the Old Swan Brewery where Zafferano previously operated. The Z1Z business also include the group’s sporting interests, most notably its backing of rugby union in WA.

Wyloo Metals

Tattarang’s mining arm recently changed its name from Squadron Resources to Wyloo Metals. “We’re focused on a few key commodities but also mining tech,” Mr Hartman said.

This includes investments in nickel (Mincor Resources), uranium (Vimy Resources) and copper.

He contrasted Wyloo from other resources investors that took passive stakes in companies.

“We run our own tenement package throughout Australia and have a team of geologists,” Mr Hartman said.

Led by Luca Giacovazzi, Wyloo also has business development and investment banking staff.

“We are able to pivot from exploring and potentially operating assets to taking cornerstone stakes in listed and unlisted companies, so it’s quite a unique mix,” Mr Hartman said.

SFM Marine

Tattarang’s newest venture is SFM Marine, formed from a merger of two businesses.

The group had been a silent, 50 per cent partner in Northport Boat Lifters at Rous Head, but at the end of last year bought out its partner and took over the commercial boat lifting operation.

It added to that with the purchase of Henderson Boat Lifters.

“We’re looking to reposition the North Fremantle product to have a greater focus on the recreational market and we’re interested in expanding the Henderson business particularly in the commercial space,” Mr Hartman told Business News.

Investments

Outside the six operating businesses, Tattarang has multiple investments.

A notable recent move was its backing of Perth-based GLX Energy, which has developed an online trading platform for LNG.

Royal Dutch Shell and Woodside Petroleum invested at the same time.

Mr Hartman said GLX had received a big indirect boost from its capital raising, and Tattarang was keen to support the local tech sector.

“They are now appealing to a whole new range of people to build the software out of Perth, which is great,” he said.

“We’d love to keep on supporting tech business opportunities in Perth so people don’t have to take their ideas to the east coast to get funded.”

STANDING BY BUSINESS. TRUSTED BY BUSINESS.

Subscription Options