Agricultural asset manager Warakirri has bought two “large scale” vineyards from wine producer Australian Vintage Limited (AVG), in a deal worth AUD62.5m (US$42.5m).

The vineyards, Grande Junction in New South Wales and Coldridge in South Australia, come with over 1,300 hectares of land and a portfolio of water entitlements.

Warakirri told Just Drinks its focus will be on “redevelopment projects, particularly of older vineyard plantings, and over time on some broader sustainability initiatives”.

It will be “business as usual” for the two vineyards, Warakirri confirmed, with no changes to management, day-to-day running or staff.

AVG is one of Australia’s largest vineyard owners, with over 2,700 hectares under vine, and manages approximately 7% of Australia’s total wine production. Grande Junction and Coldridge supply around 23,000 tonnes of grapes to its winery each year.

Warakirri will acquire and lease back the two sites on an initial ten-year agreement. AVG said the investment aims to improve yields.

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By GlobalData

The investment is part of Warakirri’s Farmland Fund, which buys and develops agricultural land and leases it back to tenants.

Steve Jarrott, the fund’s portfolio manager, told Just Drinks: “The acquisition represented an opportunity to invest in high-quality, large-scale vineyards with a best-in-class operator and tenant partner in AVG. 

“One of the primary purposes of the fund is to develop and own a diversified portfolio of investment grade agricultural property by leasing the assets to high quality agricultural business tenant partners.”

Jarrott added: “The Australian wine industry retains strong fundamentals and good future growth prospects. With our strategy and investment philosophy, patient long-term perspective, and a high-quality partner like AVG, this land and water-rich vineyard investment is a great way for the fund to gain exposure to this sector.”

AVG Chief Executive Craig Garvin said: “Warakirri are known for their world-class capability within the agricultural sector.

“They have committed to further enhance and develop the vineyards thereby improving yield output and we are really pleased to be able to work with them on this opportunity.”

Jim McKay, Warakirri Asset Management’s managing director, said: “AVG’s commitment to quality grape and wine production, innovation, social responsibility and sustainability make them a great partner for our fund’s clients.”

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