Rivco Australia Limited has completed its internalisation, reporting a modest decline in net asset value alongside rising water spot prices and a strong dividend yield, signaling evolving dynamics in the water entitlements market.
- Completed internalisation and rebranding to Rivco Australia Limited
- Net asset value declined due to dividend payments and internalisation costs
- Water spot prices surged amid dry conditions and tightening supply
- Executed forward allocation sales and a strategic leaseback acquisition
- Maintained strong dividend yield of 7.4% including franking credits
Internalisation and Strategic Shift
Rivco Australia Limited has marked a significant milestone by completing the internalisation of its key business functions during the December 2025 quarter. This transition from an externally managed entity to a fully internalised company culminated in a formal name change and relocation to new offices in South Australia. The move is designed to enhance operational control and streamline portfolio management, water trading, finance, and investor relations, positioning Rivco for greater agility in a complex water market.
Financial Performance and NAV Movements
Despite this strategic progress, Rivco’s net asset value (NAV) experienced a decline of 9 cents pre-tax and 8 cents post-tax per share during the quarter. This was largely attributable to the payment of a fully franked dividend and one-off internalisation costs, including a $3.5 million cash payment and the issuance of shares to the outgoing investment manager. While the NAV dip may raise eyebrows, it reflects a deliberate investment in the company’s long-term independence and operational efficiency.
Water Market Dynamics and Asset Management
The water entitlements market continues to tighten amid drier-than-average conditions, with southern Basin dam storages falling to their lowest December levels since 2020. This scarcity has driven a notable increase in spot water prices, with Lower Murray prices rising 27% during the quarter and continuing upward into early 2026. Rivco capitalised on this environment by executing 2,000 megalitres of forward allocation sales for the next water year, securing visible income streams and offering counterparties greater certainty.
Additionally, the company completed a $3 million acquisition and leaseback of high security water entitlements in South Australia, underpinning its portfolio with assets that command higher yields. Approximately 54% of Rivco’s portfolio is leased, with a weighted average lease expiry of 3.3 years, providing a balance of income stability and flexibility.
Dividend and Debt Position
Rivco maintained its track record of consistent dividends, paying a fully franked 3.72 cents per share in October 2025, marking its 17th consecutive dividend. The total dividends for the year reached 7.43 cents per share, translating to a gross dividend yield of 7.4% based on the closing share price. On the debt front, the company’s net debt ratio rose slightly to 6.8%, with $22.5 million drawn under a $40 million facility maturing in March 2027, leaving ample undrawn capacity to support future growth or liquidity needs.
Government Buybacks and Market Outlook
Government water buyback programs continue to influence market supply, with plans to recover up to 230 gigalitres in 2026. This ongoing reduction in available entitlements is likely to sustain upward pressure on prices and yields, particularly for high security assets that form the bulk of Rivco’s portfolio. The company’s strategic positioning and internalised operations may allow it to navigate these market shifts more effectively, though the inherent volatility of water markets remains a factor to watch.
Bottom Line?
Rivco’s internalisation and strategic asset moves set the stage for navigating a tightening water market, but investors will watch closely how NAV and dividend trends evolve amid ongoing supply constraints.
Questions in the middle?
- How will Rivco’s internalisation impact its operational efficiency and cost structure going forward?
- What are the implications of government water buybacks on Rivco’s entitlement portfolio value?
- Can Rivco sustain its dividend yield amid fluctuating water prices and market volatility?