The fund, controlled by the syndicated investment group operating MyFarm and its parent company, AgInvest Holdings, originally sought $100m for investment in orchards, vineyards and farms.
MyFarm chief executive, Andrew Watters said it wanted to raise $40m-$100m. It raised $30m from 170 investors at the deadline for a 25% deposit on investment on June 26.
The capital raise was “ little bit lower than expected at the outset but will allow the investment fund to progress several investments.
The fund is seeking approval to proceed with four initial assets – Rockit apples, kiwifruit, hops and manuka honey.
“We would have liked to have raised more but we are really happy with our investor response with a high degree of repeat investment,” Watters said.
“The assets we have assembled are also high quality.
“This will be the first diversified horticultural investment and there are plenty of examples of investments which have started small and have grown successfully.”
Rural Funds from Australia is an example.
The Kakariki properties are to be co-managed by horticulture processors and exporters including apple growers Rockit Global and Freshmax, Sacred Hill wines, craft beer hop grower Hop Revolution, manuka honey producer Comvita and kiwifruit grower and packer DMS Progrowers.
Some of those businesses are competitors to Kakariki for property, markets and experienced staff but links to them are also valuable to Kakariki as it enters fast-growing, emerging industries where intellectual property is golden.
At launch Kakariki said it will target annual investment returns of 10%, made up of earnings from the sale of crops through the partners and any increases in land values. The fund will benefit from exposure to all ventures in the portfolio, reducing the risks that come with investing in a business in a single geographic location and focused on a single crop.
Kakariki’s initial call of 25 cents in each $1 invested aims to buy four initial assets:
• An 11 canopy-hectare SunGold kiwifruit orchard in Bay of Plenty;
• A 50% share in a large-scale, 130 canopy hectare hop garden in Nelson;
• 35 canopy hectares of Rockit apples in Hawke’s Bay and;
• A 2000ha manuka plantation.
Watters said it will keep accepting applications until August 9.
Kakariki is a departure from MyFarm’s established syndications, which allow individual investors to pool their resources. MyFarm has raised $165m for syndicated investment into 18 orchard, vineyard, hop garden and manuka plantation businesses since 2015.
In partnership with MyFarm industry newcomer Hop Revolution is planting 116ha at its Tapawera hop garden and expects its first harvest in March 2020.
Hop Revolution will be responsible for breeding, managing plant variety rights and marketing hops directly to craft brewers. It has bought new harvesting equipment and kilns in preparation for the investments.
MyFarm describes Tapawera as a growth story of controlled supply through plant variety rights, a customer-focused approach to breeding and production and niche marketing to build a premium global brand.
Cash returns are forecast to start in 2021 rising to 15% a year in 2023. The total capital raise was $17.64m including a $3m share in Hop Revolution. The minimum investment was $100,000.
Watters said 80-90 of the Kakarirki investors already have some type of exposure to MyFarm’s agriculture or horticulture investments. Just over 20% of the investment came from Auckland, 18% from Bay of Plenty and 15% from Wellington. A plan to list the fund on NZX within three years remains intact, Watters said.
Conflict is no problem
At a recent Kakariki Fund investor roadshow MyFarm sales head Grant Payton said prospective investors had asked Kakariki how it would handle conflict of interest.
A director, former Zespri chairman John Loughlin, is also a director of Rockit, Hop Revolution and packing firm EastPak.
Another high-profile Kakariki director is former Horticulture NZ chairman Julian Raine, a director of NZ Hops, the industry’s grower-owned co-operative and a competitor to Hop Revolution.
Payton invited Loughlin to explain his approach.
“Basically, the way I handle conflict of interest is when I’m conflicted and when others are conflicted, the conflicted person gives their point of view and then must leave the room and not participate in the discussion,” Loughlin said.
“Over the years I’ve had some really interesting insights from conflicted people who have participated in the decision.”
The agribusiness veteran is comfortable Raine can add valuable insight from the point of view of an industry competitor.
“By having both views the directors are well-placed to weigh that information to make an objective call,” Loughlin said.
