Cobram Estate Olives Raises $185M to Grow US Olive Oil Empire
Cobram Estate Olives Limited has launched a $185 million capital raising to fund a major expansion of its vertically integrated olive oil operations in California, aiming to become the largest olive farmer in the US.
- Institutional placement raising approximately $175 million
- Share Purchase Plan targeting up to $10 million
- Expansion of Californian olive groves to 3,600 hectares by 2027
- Expected annual production capacity exceeding 9 million litres at maturity
- Director sell-down of 2 million shares to repay loans and taxes
Strategic Capital Raise to Fuel US Growth
Cobram Estate Olives Limited (ASX, CBO), a leading global producer of premium extra virgin olive oil, has announced a significant capital raising initiative comprising an institutional placement and a Share Purchase Plan (SPP). The combined raise of up to $185 million is designed to accelerate the company’s expansion in the burgeoning US olive oil market, particularly through the acquisition and development of new olive groves in California.
The placement will issue approximately 54.7 million new shares at $3.20 each, representing an 11.5% increase in the company’s shares on issue post-placement. The SPP, capped at $10 million, offers eligible shareholders a chance to participate on the same terms. This pricing reflects a modest discount to recent trading prices, signaling confidence in the company’s growth prospects.
Scaling Up Californian Operations
Central to Cobram Estate’s growth strategy is the expansion of its vertically integrated olive oil operations in California. The company currently owns 1,025 hectares of olive groves in the state, with only 20% mature and productive. The capital raised will fund the acquisition and development of an additional 1,600 hectares, increasing total grove area to approximately 3,600 hectares by the end of 2027.
At full maturity, these groves are expected to produce over 9 million litres of extra virgin olive oil annually, a substantial increase from the current average of 0.5 million litres. This scale-up positions Cobram Estate to become the largest olive farmer in the US, capitalizing on rising consumer demand for locally produced, premium quality olive oil amid ongoing import tariffs on foreign products.
Leveraging Proprietary Expertise and Brands
The company’s competitive edge lies in its proprietary Oliv.iQ® integrated olive production system, which delivers superior yields and sustainability outcomes compared to global peers. Cobram Estate’s premium brands, including the number one selling Cobram Estate® olive oil in Australian supermarkets and a top-ten brand in the US, underpin its market leadership.
Joint-CEO Leandro Ravetti has relocated to the US to oversee the accelerated land acquisitions and grove development, signaling the company’s commitment to its US growth platform. The expansion is supported by existing milling and bottling infrastructure in California, which will be scaled alongside grove development.
Director Sell-Down and Governance
Alongside the placement, two Joint-CEOs, Sam Beaton and Leandro Ravetti, will sell a combined 2 million shares valued at $6.4 million. The proceeds will primarily repay outstanding director loans and associated capital gains tax. Both directors remain significant shareholders and committed to the company’s long-term success.
Risks and Market Context
The announcement also highlights key risks including weather variability, pest and disease threats, reliance on major customers such as Woolworths and Coles, regulatory compliance, and market price fluctuations. The company’s geographically diversified groves across Australia and the US provide some mitigation against climatic risks.
With US olive oil consumption growing at a compound annual growth rate of 4.5% and the Californian olive oil segment still underpenetrated, Cobram Estate is well positioned to capture significant market share. However, the placement is not underwritten, and the timing of land acquisitions remains subject to due diligence and escrow processes.
Bottom Line?
Cobram Estate’s bold US expansion and capital raise set the stage for a transformative growth phase, but execution risks remain as it scales rapidly in a competitive market.
Questions in the middle?
- How quickly will Cobram Estate secure and develop the targeted 1,600 hectares of new groves in California?
- What impact will the increased US production have on import tariffs and competitive dynamics in the US olive oil market?
- How will Cobram Estate manage supply chain risks given its current reliance on third-party growers for a significant portion of US olive fruit?
