Returns from New Zealand dairy farms have historically rivalled share market returns but until now they have been the preserve of farmers and wealthy or experienced investors (as defined by the Securities Act 1978) who are eligible to invest in non-public offers.
That has all changed with the registration of an Investment Statement and Prospectus for an offer of up to $3.8 million by PRD Investments Ltd. Through the PRD Investments Ltd offer, the wider public can now make an indirect and passive investment in the latest MyFarm dairy farm syndicate.
Promoted by MyFarm, PRD Investments Ltd is a collective investment vehicle (“CIVâ€) that will pool smaller investments from the public (the minimum investment is $20,000) and make a single larger investment in a new syndicate that MyFarm is forming to acquire a high producing mid-Canterbury dairy farm. This farm, which was converted to dairying four years, is a proven performer with near new infrastructure including a seven hectare irrigation lake.
According to MyFarm director Andrew Watters, the syndicate in which PRD Investments Ltd intends to invest is focused on investment yield rather than capital gain and is based on providing a quarterly flow of distributions from next autumn onwards.
“While there is a general awareness that dairy farms have been a good source of capital gain, investors are less aware that at current milk prices a large well-run dairy farm with a prudent level of debt will generate pre-tax operating profits of around 6% p.a. after the first year.â€
Mr Watters said PRD Investments Ltd was the fourth CIV MyFarm had promoted in the last 12 months, and the first that was available to the general public.
“Investment in the first three CIVs was well received due to their much smaller minimum investment level ($20,000 vs $250,000), however they were restricted to wealthy or experienced investors.
“The move to prospectus-based offerings is not only aimed at making syndicate investment available to a wider group of investors, it is also aimed at facilitating the formation of a new secondary market that we are developing, called MyFarm Trading.
“We plan to promote a new prospectus-based CIV for each new MyFarm syndicate and for some of our existing syndicates as well. By using a registered prospectus for the CIV offers we make, we will be able to quote shares in these CIVs on MyFarm Trading which we intend to operate as a private market on the Unlisted trading platform from later this year.â€
MyFarm will manage PRD Investments Ltd for an annual fee of 0.5% of the value of its syndicate investment. This fee, which reduces investor returns by the same amount, is the only additional cost of investing in PRD Investments rather than directly into the syndicate, and covers all day-to-day running costs of PRD Investments, including accounting, auditing and Unlisted quotation fees.
About MyFarm
In the past five years MyFarm has grown to become one of the largest dairy farm investment managers in New Zealand. It has more than $500million of assets under its management – 47 dairy farms milking 32,000 cows and 4 North Island sheep and beef properties.
Source: Scoop
