Boundary Bend Looks for 'Patient' Investors

Summary

Boundary Bend, an Australian olive oil pro­ducer, is seek­ing around $100 mil­lion from investors to fund a new plan­ta­tion near Mildura, which could increase the group’s vol­umes by up to 50 per­cent. CEO Rob MacGavin is specif­i­cally seek­ing long-term, patient Australian investors to sup­port the project, which is expected to take sev­eral years to reach max­i­mum out­put.

Boundary Bend, the renowned Australian olive oil pro­ducer, is look­ing to raise roughly $100 mil­lion from investors to fund a new plan­ta­tion on land the com­pany has acquired at Gol Gol, near Mildura.

The plan would boost the group’s vol­umes by as much as 50 per­cent.

Rob McGavin, the CEO, co-founder and major­ity share­holder of Boundary Bend, said it could take sev­eral years for the project to reach max­i­mum out­put. So he’s seek­ing investors who are com­mit­ted.

“Long-term, patient, Australian investors is what Boundary Bend is look­ing for, ide­ally a patient super­fund and def­i­nitely not pri­vate equity,” he told The Sydney Morning Herald news­pa­per.

According to McGavin, ini­tial plant­i­ngs would likely begin in 2019 and cover some 3,000 hectares.

McGavin’s deci­sion to expand would seem to be a vote of con­fi­dence in strong prices for olive oil dur­ing the next few years. Inventory lev­els across the globe remain low, and invest­ment in the sec­tor has been spotty. Yet prices have begun to rise amid increas­ing demand. ​“There’s a crunch com­ing,” he told the news­pa­per.

The finan­cial mar­kets would seem to agree with McGavin’s pre­dic­tion and his approach. Boundary Bend’s share prices have more than dou­bled in the past year.

The deci­sion to seek cap­i­tal comes roughly three years after Australian investor and busi­ness­man Chris Corrigan con­tributed more than $4 mil­lion to help fund Boundary Bend’s expan­sion to the United States.

In 2015, Boundary Bend expanded to the U.S. estab­lish­ing a pro­duc­tion facil­ity and U.S. head­quar­ters in the California town of Woodland, about 12 miles from Sacramento, the state’s Capital.

Founded in 2005, the group is now the largest olive oil pro­ducer in Australia, where it has 65 per­cent of the mar­ket in high-qual­ity extra vir­gin olive oil.

The com­pany owns 2.3 mil­lion trees on 6,500 hectares in its native coun­try, accord­ing to the Australian Business Review, and gen­er­ated $130 mil­lion Australian dol­lars (US$99 mil­lion) in 2016.

Boundary Bend is a ver­ti­cally inte­grated com­pany – con­trol­ling the entire cycle from nurs­ery to mar­ket­ing. It has gen­er­ated con­sid­er­able praise for the qual­ity of its prod­ucts, the group’s will­ing­ness to con­duct and share research, its state-of-the-art pro­duc­tion facil­i­ties (its plants in north­ern Victoria have a capac­ity of 1,700 tons per day), and its abil­ity to win share from the well-estab­lished European brands.

The company’s flag­ship, Cobram Estate, was the win­ningest brand at the 2014 New York International Olive Oil Competition (NYIOOC). Its Cobram Estate Australia Select won best in class in the 2016 NYIOOC, and its Cobram Estate Ultra Premium Hojiblanca won best in class in 2015.

• The Sydney Morning Herald


• The Australian Business Review