A SCOTTISH-based agricultural group yesterday announced plans to raise £3 million in a stock market flotation to take advantage of growing global demand for grain and rising farmland values.
Greenshields Agri, which is headquartered in Edinburgh and produces wheat, barley and oilseed rape, is looking to use the funds to add to its portfolio and said the AIM flotation would make it the only public company offering investors access to UK farmland ownership.
The announcement came as speculation mounted that Edinburgh energy consultancy Wood Mackenzie could also be planning to join the stock market in a float which could value it at up to £2 billion.
Greenshields, which was founded in 2010, currently owns over 2,850 acres of farmland in the “northern grain belt”, the strip of arable farm land stretching up the east coast of the UK from the Humber estuary in England to the river Tay in Scotland. Its sites include Spott Farm in East Lothian.
The group is also a member of Grainco, the farmer-owned grain trading and marketing business which supplies customers including Diageo, Tennent Caledonian Breweries and Quaker.
Greenshields said rising land values were one of the key reasons it was looking to expand its operations with arable land outperforming other traditional asset classes over the long term. It cited latest annual figures showing a 14 per cent rise in the average value of UK prime arable farmland and said it had enjoyed cumulative growth of 277 per cent over the past decade compared to growth in prime London property prices of 135 per cent.
It also said the trend of rising prices was expected to continue, with forecasts anticipating an increase in value of UK farmland of between 6-8 per cent a year over the next five years. Greenshields has already earmarked 220 acres of farmland in Northumberland which will be acquired after the flotation.
The company said that the northern grain belt offered some of the highest wheat yields in the world thanks to fertile soil and longer daylight hours during the summer, but with lower land prices than found further south.
Greenshields said its farming strategy aims to enhance the quality and productivity of the soil to secure year on year increases in yields. In 2014 it produced yields of 9.1 tonnes of wheat per hectare, ahead of the UK’s national average of 8.6 tonnes per hectare.
Bill Boase, chief executive, said joining AIM would give Greenshields “an excellent currency with which to expand its operations through acquisition of additional farmland and investment in equipment, crop production and income diversification”.
“Greenshields is a proven and professional farming business managed by experienced operators. It is well positioned to benefit from expected increasing global grain demand, as well as anticipated continued increases in value of UK arable land. The board is very excited about this opportunity.”
Meanwhile, US private equity firm Hellman & Friedman is understood to have appointed Lazard to advise it on a possible stock market listing of Wood Mackenzie which operates 20 offices around the world.
The company is reported to have received a number of takeover bids for the consultancy recently including offers from US firms Verisk Analytics and McGraw Hill Financial.
Hellman & Friedman acquired a 63 per cent stake in Wood Mackenzie in July 2012 in a deal which at the time valued the business at £1.1 billion.
SUBSCRIBE TO THE SCOTSMAN’S BUSINESS BRIEFING