Agribusiness investment company RuralAus has made it first new investment since emerging from voluntary administration 14 months ago, putting $500,000 into Western Australia’s largest craft brewer, Gage Roads Brewing Company.
The investment is by the way of unsecured convertible note, which will automatically convert into 1.25 million shares upon Gage Roads’ listing on the Australian Stock Exchange, expected to take place in mid-December.
Formerly known as Australian Growth Ltd, the company relisted on the ASX as RuralAus in July 2005.
After a two-year period of intensive restructuring and three capital raisings, the company has abandoned the managed investment schemes market for more established investments, and has widened its scope outside of its traditional agribusiness investment focus.
RuralAus chief executive officer Peter Kinnear said the company had looked at a significant number of agribusiness investments, but found most were too highly priced.
“We looked at [Gage Roads] very closely and we felt that it was a good investment opportunity,” Mr Kinnear told WA Business News.
“We felt that the pricing was reasonable, and that there was potential for strong growth.”
He said the company had decided not to continue down the MIS route as it exposed it to an unacceptable level of risk.
And with the drought continuing to bite, investment opportunities in the agribusiness sector became a less viable option.
“We’ve always known that the investments we obtained through the restructure were not going to provide any prospects of continuing growth, hence the reason why we’ve got to look outside of that whole area,” Mr Kinnear said.
“We would prefer to be in the agribusiness area, but at this point of time it’s been very difficult to find those opportunities.
“We do think that asset values will probably come back and may present us with some opportunities then. But at the moment, that’s not the case.”
Having successfully bought the last of the shares held by the creditor’s trust in July this year, the company is now in the process of doing an on-market share buy back to enhance its share value and assist in the management of capital.
This week, shares in RuralAus were trading at 22 cents, less than its diluted net asset value of 36 cents per share.
Gage Roads lodged its prospectus last week to raise $4 million in its initial public offering.
