Saturday, April 13, 2024

Investors back Hawke’s Bay regen farm

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A syndicate of private investors is backing what it sees as the future by investing into a farm that’s being run on regenerative principles. The Future Farming syndicate has been created by Napier-based investment management company Tremain Capital.
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A syndicate of private investors is backing what it sees as the future by investing into a farm that’s being run on regenerative principles.

The Future Farming syndicate has been created by Napier-based investment management company Tremain Capital.

Owner Chris Tremain says the company started out investing in commercial properties, which still underpins much of what it does, but more recently it has moved into horticultural and agricultural investment opportunities, one of which is Greg and Rachel Hart’s Mangarara farm in Central Hawke’s Bay.

He and Greg have been friends for more than 30 years, so he was aware of Mangarara’s regenerative approach to farming and Greg’s vision for the future.

He also knew that Greg was looking for some external investment in the farm and that Tremain Capital’s limited partnership model could be an opportunity to provide that, which led to the establishment of the syndicate.

There are seven investors involved, some of who were already connected to the farm and others who were not but who were part of the Tremain Capital’s wider investment community.

Because of the syndicate’s model its members have to be wholesale rather than retail investors. To qualify for that, investors have to meet criteria set by the Financial Markets Authority, including having already invested in a range of financial products for a period of time of their own accord.

Tremain says like all investments there’s an element of risk and the returns available are different to other opportunities.

“Many of our investors are looking for a more meaningful investment within their portfolio. The investment into Mangarara will help to restore the land, improve animal health and support the wider rural community’s health,” Tremain said.

“The investors are a mix of relatively high net worth people who want to be involved in an investment that can help shape the future of New Zealand farming.”

He says, for these clients, profit is just one driver amongst a range of other holistic goals, including soil, animal and people health.

“In addition to running a profitable farm, there will be an accommodation dividend so we’re establishing a partners’ cabin on the property, which will be built over the next couple of years,” he said.

“And there’s a produce dividend, so part of the return profile includes receiving produce off the farm every six months or so.”

There will also be dividends when the business can support this cashflow, along with any capital value appreciation over time.

Greg says he got involved for a number of reasons.

“It has given us the ability to get rid of all our bank debt and allowed us to get some cash out of the farm as well as adding capital to the farm business, which will be used for further development,” Greg said.

“It also brings the expertise of Tremain Capital, who have obviously been very successful in a number of their businesses.

“There’s always plenty of room to improve the business, with our sales and marketing, and business strategies.

Although they’ve only been in this for a few months now, it’s exceeding their expectations.

“We’ve had challenges coming out of the second pretty dry summer/autumn in a row but no longer do you feel alone as a farmer dealing with these issues,” he said.

He says the extra layer of support helps to make decisions based on sound investment principles rather than emotion.

It also brings discipline to the farm’s management, particularly around budgets and reporting.

“Having these people involved with our business, both as support and to help make sure the right systems are in place, like good business management processes and structures, is really beneficial,” he said.

Tremain says this type of investment won’t suit everyone and like all businesses, there will be tough times.

The investors have a clear understanding of how it works and Greg has set up a WhatsApp group chat, so they can be engaged on a daily basis with what’s happening on the farm.

He says for most of those involved the syndicate is a relatively small part of their investment portfolio.

“Of course they want to make a profit but I’m increasingly seeing members of my investment community wanting to have some investments that have a social and environmental aspect to them,” Tremain said.

“They also want to be part of something that’s growing and improving our environment and our planet.”

He says in terms of the word regenerative, almost every New Zealand farmer is on some part of the journey towards it.

“Everyone is trying to improve their farm and leave a better legacy for their kids or for the future, but I think what the regenerative movement is helping to do is better define soil, animal and farmer health for both the rural community and their customers,” he said.

“It’s certainly got a big future.”

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