It is called the Natural Farm Foods Ltd Partnership Fund (NFFLP) launched by Farm Venture, a Taranaki-based farm property and management business.
It is open to institutional and wholesale investors as well as individuals and overseas involvement is capped at 30% of the first tranche of $50 million.
The fund is seeking a minimum of $25m before May 25 to buy three dairy farms already under sale and purchase agreements, livestock and supply shares.
The minimum investment size is $100,000 and the targeted returns are 10% annually, being 6% from operations and 4% from capital value increase.
Farm Venture principal Tim Barrett said the sustainability of the fund and its returns come from diversifying investments into dairying, sheep and beef, poultry and horticulture and some integrated operations, such as beef finishing of dairy calves, honey harvesting and forestry development across all properties.
Dairy farm values have fallen about 15% since the two recent bad milk payout seasons and onfarm investment in new technologies and improvements will underpin the targeted returns, Barrett said.
He is also very keen on maximising the pastoral agricultural attributes in New Zealand’s primary products, hence the NFFLP name.
Both a farmer and farm adviser, Barrett and partner Mike Trousselot founded Farm Venture in 2005 and have done six farm syndicates since then.
The new fund has added features that traditional farm syndicates don’t have – mainly low borrowing, flexibility in choices for investment, a redemption pool for investors who want out and the liquidity and reporting benefits of the Syndex platform.
Farm operators willd also be encouraged to be fund investors, to build their capital and open opportunities for farm ownership.
“The opportunities for young farming families to invest in their businesses and livelihoods provides common alignment with investors for performance,” Barrett said.
The NFFLP had been open to institutions since January and had attracted considerable interest, such that he expected the first tranche to fill readily.
Second and third tranches of $50m each were planned.
The Syndex platform for trading alternative investments has been operating since 2015 and is approaching $1 billion of equities under administration, managing director Ross Verry said.
About half of those equities are in the primary sector, including the MyFarm syndicates listed on Syndex.
“The benefits to Farm Venture and its investors from utilising Syndex focus on administrative ease.
“Detailed reporting can easily be distributed to investors and they can access information and analytics around financial, operational and environmental performance all in one place, at any time.
“The diversification, scale and low leverage of the NFFLP 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,” Verry said.
He is the former head of agri for ANZ Bank and has been the managing director and part-owner of Syndex for 18 months.
