The deal terms mean it can force an IPO of the leading John Deere agricultural equipment distributor after three years.
Already a subscriber?Ellerston’s Industrial Growth Fund is betting on Australia’s western “wheat belt”, ploughing funds into a leading John Deere agricultural equipment distributor and opening the door to co-investors.The fund, run by investment partner Mark Paton, is set to make a $35 million equity investment in Western Australian franchisor AFGRI Australia via a subscription to preference shares.
Of note, the deal terms mean Ellerston can “force an IPO” after three years, according to an investor presentation seen by Street Talk. The fund will also pick up two of the five board seats and 25 per cent voting rights in the company, which is forecast to turn over $635 million in revenue and $41.6 million in EBITDA for the financial year 2025.
John Deere distributor AFGRI Australia earns about 55 per cent of its gross profit from recurring parts and servicing sales.AFGRI’s parts and service earnings are expected to represent more than 50 per cent of gross profit in FY25, or over $60 million. Another 40 per cent, or $45 million, is forecast to flow from new equipment sales.
As such, revenue is forecast to fall 22.8 per cent to $635 million and gross profit is tipped to decline 15 per cent to $111 million. The fund expects strong growth in AFGRI’s construction and forestry division, and 8 per cent growth in parts and services revenue on the back of strong sales and expects inter-state M&A opportunities to be a driver of future earnings.
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