Eridanus initial strategy is to rapidly build scale and meet the S12J requirements by investing into an existing pipeline of investments and obtaining an equal equity stake in agricultural equities.
Key Ingredients in Eridanus Strategy
- To obtain an equal equity stake in private agricultural equities.
- The farming equities considered have proven their profitability over the last decade.
- The current portfolio has space for ZAR 60 million in moveable production assets, ZAR 60 million for the production costs of crops and ZAR 30 million for later investment in cattle production.
Excellent existing portfolio and pipeline
Eridanus is obtaining equity in some of the following private agricultural equities:
- 830 ha of dryland crops production
- 426 irrigated crops production
- Capital requirement for production 26 mil
- capital requirement for movable production assets 15 mil
- totaling 41 mil
- current running ROI 19%
Plant And Equipment
- Buying and managing of the movable production assets for the internal use of the group companies
- Estimated ROI 12%
- 370 ha dryland crop production
- 110 ha irrigation crop production situated in Mpumalanga
- Capital requirement for production 14 mil
- Capital requirement for movable production assets 5 mil
- Totaling 19 mil
- Current running ROI 17%
- 400 cattle units
- 700 ha dryland crops production
- 200 ha irrigated crops production situated on the rich Highveld where no coal or any other mining activities are taking place
- Capital requirement for production 22 mil
- capital requirement for Moveable assets 13 mil
- totaling 35 mil
- current running ROI 17%
- 200 cattle units
- 400 ha dryland crops production
- situated on the rich Highveld with no coal or any other mining related activities
- Capital requirement for production 8 mil
- capital requirement for Moveable assets 5 mil
- totaling 13 mil
- current running ROI 16%
Good Pipeline of attractive new opportunities
Beyond the first five existing opportunities Eridanus have the opportunity of investing in Cattle Ranches which are currently under development. This company will be buying cattle at plus minus 170 kg and taking it up to 270 kg in three months by mostly using all the waste generated from the crops production activities making it a highly profitable investment. Cattle Ranches will aim to have 3000 cattle on site at any given time buying 3000 cattle per month in and selling 3000 cattle per month when running at full capacity. This investment will cost approximately 25 mil and give an estimated ROI of 35%.
All investments will require approval from Eridanus’s Investment Committee and will be subject to strict investment mandate requirements that included a minimum return expectation from 15 % to 20 % (Pre 12 J impact) on qualifying asset level. Eridanus will be conservative in its capital raising efforts and anticipates only raising capital as required by the underlying agricultural investments.