Cents in sheep? Syndex’s new diversified fund banks on big money in New Zealand agriculture
Agriculture. Pastoral scenes of rolling green fields, cows lazily munching grass, sheep standing about and doing whatever sheep do, fruit ripening on trees, the occasional alpaca wandering about for no apparent reason…
Doesn’t exactly scream “massive investment opportunity,” does it?
Think again, say the folks at Syndex. The investment platform has announced the listing of its first diversified agriculture fund for New Zealand enterprises – and let’s just say the numbers are so large, one might just think money really does grow on trees.
The “Natural Farm Food Limited Partnership” (NFFLP) fund is run in conjunction with Farm Venture, a farm property and operations management business based in Taranaki. The new fund targets a total capital raise of $150 million, with a first close of $50 million.
Translation: we’re talking about some seriously big money.
Mike Jenkins, founder and executive director of Syndex, says it also dispels myths that agriculture isn’t an area of great financial opportunity for investors. “Agriculture is an extremely exciting area,” he says.
He says about 58 investment vehicles in the platform offer access to about $800 million worth of assets. “Even for institutional investors, they can struggle to find access on this scale.”
Syndex chief executive Ross Verry says individual investors already have other options to invest, but the NFFLP’s difference is how it is open to institutional and wholesale investors from around the world who want to get in on the action in Aotearoa. “The Farm Venture fund is unique in that it also lets in institutional and wholesale investors on the action. It is an innovative structure, responding to a strong demand for new models and products supporting wealth creation and growth.”
Jenkins says the new fund taps into a growing demand from institutional and wholesale investors and private equity funds. Farm Venture managing director Tim Barrett says something similar, too, while adding there is still plenty of opportunity for New Zealand investors to get involved to make sure they’re not muscled out of the market. “Internationally we see investment portfolios with much higher weightings in alternative investments and particularly agricultural assets. It is aimed squarely at New Zealand investors, with international investors capped at 30 percent of tranche one capital raising.”
The fund is targeting returns of 10 percent a year (“per annum” in financial lingo), with a 6 percent per annum return from operations after management fees and before tax, plus a 4 percent per annum capital value increase potential from productivity improvements and valuation movements.
Barrett says: “Farm Venture provides support to the on-farm management team to ensure effective planning and implementation of farming practices as well as strong performance and growth. Investors will be kept well-informed of our progress thanks to our strict reporting disciplines. The on-farm management teams are also encouraged to invest in the fund for common alignment, to secure their future as the operational farmers for New Zealand.”
According to Syndex’s Verry: “The diversification, scale and low leverage of the fund, combined with the transparency and secondary market that Syndex delivers, means that this fund offers a higher level of liquidity than traditional agricultural investments.”
Jenkins repeats that a big takeaway is that there are plenty of opportunities for investment in agriculture in New Zealand – it’s just those opportunities don’t always make the headlines in the same way tech or other industries might. “The returns are very promising.”