Warakirri Asset Management is aiming for risk-adjusted returns of more than 10% for its new fund, which will target dairy assets across Australia and New Zealand.
Warakirri launches A$500m dairy fund as PSP partnership wraps up

Warakirri Asset Management is aiming for risk-adjusted returns of more than 10% for its new fund, which will target dairy assets across Australia and New Zealand.

Agricultural investor Warakirri Asset Management has launched a new strategy focused on Australian and New Zealand dairy assets with a fundraising target of more than A$500 million ($311 million; €299 million).

Warakirri’s new strategy comes as Canadian pension investment manager PSP Investments moves to internalize the management of Aurora Dairies, a company Warakirri has managed on PSP’s behalf since 2019.

Current Aurora Dairies CEO Ben James will lead Warakirri’s new strategy, which aims to produce a riskadjusted return of more than 10 percent per annum, leveraging the experience of the Warakirri team involved in Aurora.

James joined Warakirri in 2012 as an operations manager and soon became CEO of Warakirri Dairies, the portfolio of which would become the seed assets for Aurora Dairies.

“We underwent some pretty significant expansion in the Aurora Dairies business, and we’re particularly proud of what we’ve been able to achieve there,” James said.

“It comes back to the quality of our team to be able to do that – going from 11 farms to over 50 farms, from 8,000 cows to more than 50,000 cows, from 65 million liters of milk to over 300 million liters of milk, and from a business that had 80 people to a business that has around 500 people.”

The Aurora portfolio currently boasts 57 farms across six regions in Australia and New Zealand.

James will continue as Aurora’s CEO while the company manages a transition period, before turning his attention fully to Warakirri’s new strategy.

Warakirri, which has managed Aurora Dairies on an exclusivity basis, will also exit its co-investment in Aurora at the end of that transition period.

The new fund, which is yet to be named, aims to build a diverse portfolio of premium dairy assets to leverage a domestic and global milk supply deficit.

Between 1980 and 2023, the number of dairy farms in Australia has fallen by about 80 percent, from 20,000 to less than 5,000, according to the Australian Bureau of Agricultural and Resource Economics.

The remaining farms have grown much larger, with average herd sizes more than tripling and milk output per farm surging by 570 percent from 1978-79 to 2022-23.

Overall milk production peaked in 2001-02 at about 11.3 billion liters and has since dropped by 26 percent, with some states including Queensland seeing particularly steep declines.

Recently, however, better farm incomes have spurred record levels of new investment, according to ABARES.

Meanwhile, shipping issues along major trade routes, as well as tightening milk supplies and rising export prices in the northern hemisphere, have boosted demand for dairy from Oceania, according to Dairy Australia.

“In principle, it’s about selecting, acquiring and strategically investing in high-quality assets; it’s about building and developing a diversified portfolio with scale; and it’s about prioritizing people and safety to be able to deliver top-tier execution and operating performance,” James said.

No rush out of the gate

Warakirri head of managed funds platform Joe Marassa said the new strategy will commence once the fund reaches A$150 million in initial capital commitments followed by a portion of debt “to help get it up and running.”

Marassa said Warakirri has already started conversations with investors including domestic superannuation funds, global pension funds and domestic and offshore asset consultants.

“You’ve just got to work your way through the capital-raising process, particularly with some of the offshore clients who haven’t necessarily had experience or exposure to dairy as a strategy – they may be more familiar with forestry or cropping.

“So, there’s an education piece there, but those discussions have been progressing pretty well, and we’ve been investing in and managing agriculture for 30 years, so it’s not like we need this to happen in the next month.

“We have scale in a number of other portfolios, and we’ll keep engaging with that base.”

Those other portfolios include Warakirri Cropping, which manages a 155,000ha broadacre cropping portfolio on behalf of Rest Super, and Solterra, which manages a separate 26,000ha broadacre cropping portfolio on behalf of Farmland Reserve, a company associated with the Mormon Church.

Apart from the new dairy fund, Warakirri has two open-end funds currently in market: its Farmland Fund and Diversified Agriculture Fund, which have more than A$100 million and A$150 million in portfolio assets, respectively.

The internalization of Aurora Dairies follows a trend for PSP, which noted in its 2024 annual report that its portfolio and operations have expanded significantly over the past decade, and that its “global scale” required a shift in strategy:

“This evolution included greater internal management, diversification into private markets and international expansion to ensure PSP Investments exceeds its long-term return objectives,” said the annual report.

In 2022, PSP internalized the management of its two Australian cropping companies, BFB and Daybreak Cropping, ending Warakirri’s management of the latter after a transition period.

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