■ Farmland Fund/New Zealand Farmland

MyFarm : is New Zealand’s most experienced farm investment company.?

Bonjour Kwon 2014. 8. 28. 19:06

 

http://www.myfarm.co.nz/

 

 

The MyFarm Story

MyFarm is New Zealand’s most experienced farm investment company.

While farm ownership has traditionally been beyond most individual investors, MyFarm changed that when, in 1990, our predecessor AGInvest was formed. The founders recognised that New Zealand farmland represented a productive and tangible investment, which generated attractive returns over the long term.

Today, we have more than 300 syndicate investors and 47 dairy and six sheep and beef farms under our management across New Zealand, with a total asset value of $550 million.

How MyFarm selects farm assets

Such scale and longevity is not by chance. It all comes down to identifying farms with high productivity potential – that is, farms capable of performing in the top quartile for their region.

It’s an approach that delivers results. If you invested $1,000 in a MyFarm property 20 years ago, it would be worth $11,800 today. This compares to an average dairy farm (based on DairyNZ statistics) investment, which would have turned $1,000 into $8,500 over the same period.

It is no coincidence most of the properties we select are in Southland and Canterbury. We target properties in these regions with fertile, free-draining, silt soils and good summer pasture growth (from summer rain in Southland and irrigation in Canterbury). We then complement this with quality stock and infrastructure, top management and a sound business plan. This approach maximises a business’s ability to perform consistently, with predictable costs and reliable cashflow, while also adding to the property’s value through productivity growth.

History

In 1990, farmer, investor and property valuer Cliff King and dairy farmer and property assessor Lyn Williams established Agricultural Investments Limited. The company was responsible for several critical changes within New Zealand’s agricultural sector at the time, including an industry-revolutionising review of AFFCO’s livestock procurement systems.

One of AGInvest’s largest asset management successes was the Dairy Brands operation in Canterbury. It was purchased in 1999 and liquidated in 2002, achieving a gross return to investors of 54% per annum.

In the early 2000s, Lyn Williams left AGInvest to pursue family interests and top-performing dairy farmers Andrew Watters and Grant Rowan – both Sharemilker of the Year prizewinners – joined the partnership.
In 2005, Agricultural Investments Limited renamed as AGInvest and made the move into dairy farmland asset investment via syndication. Three years later, “MyFarm” was created and has since cemented itself as New Zealand’s leading provider of secure and profitable farm investments.

In 2013, Cliff King retired and his share of the company was purchased by a group of investors, including experienced New Zealand business and agribusiness people, as well as a group of senior and long-serving MyFarm staff.

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Ownership and company structure

AGInvest Holdings is the parent company of MyFarm Limited. It also has cornerstone shareholdings in MyFarm Sheep and Beef, New Zealand Grazing South and Figured.com.

The AGInvest board consists of chairman JT Macfarlane (formerly chief executive of Deutsche Bank Australia and New Zealand), executive directors Andrew Watters and Grant Rowan, director Neil Craig (founder Craigs Investment Partners) and alternate director Paul Richardson (Mint Asset Management).

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MyFarm: Key facts

Number of dairy farms: 47
Number of sheep and beef farms: 6
Value of farm assets under management: $550m
Cows milked: 37,000
Kilograms of milks solids 2013/14: 15m (forecast

MyFarm is New Zealand's most experienced farm investment company.

For the past 24 years, we have been putting together and managing farm assets, giving individual investors the opportunity to own shares in top-quartile performing dairy and sheep/beef businesses.

Today, we manage more than 50 farms, with a total asset value of $550m.

 

 

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How to Invest

 

 

What is the minimum investment I can make?

 

MyFarm offers three different ways you can invest in New Zealand farms.

These are:

  • Become a shareholder in a MyFarm syndicate: The minimum investment in a MyFarm farm syndicate is NZ$250,000, but this depends on the syndicate. Investments are currently offered in dairy and sheep and beef farms in New Zealand and Australia.  MyFarm investment offers are not able to be taken up unless you are a person who comes within section 5(2CBA) of the Securities Act. You can view the Securities Act requirements here.
     
  • Investment in a MyFarm Collective Investment Vehicles (CIVs): MyFarm offers investor partnerships which invest in MyFarm syndicate investments, at a lower $20,000 minimum investment threshold.  A collective investment vehicle is an entity which allows investors to pool their money and invest the pooled funds in a syndicate, rather than buying syndicate securities directly as individuals. Each new MyFarm CIV is structured as a limited liability company, and has a single investment in a specific MyFarm syndicate.
     
  • Trade farm shares on MyFarm Trading:  MyFarm Trading is an internet based unregistered securities trading facility for the buying and selling of investments in dairy farm syndicates serviced by MyFarm. MyFarm Trading operates as a private secondary market using the Unlisted trading platform.  The minimum holding in any particular CIV is 20,000 shares at an issue price of $1.00 per share. on MyFarm Trading, shares can be bought and sold in increments of 1,000 shares ($1000). 

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Why are most MyFarm investment opportunities in Canterbury and Southland dairy farms?

 

 

MyFarm investors have had good investment outcomes from other regions in New Zealand. However at present Southland and Canterbury dairy farms represent the best quality assets (in terms of scale, quality of improvements and production potential) and the best value for money. Be assured we are looking outside these areas.


 

 

 

How do you set the production targets in MyFarm business plans for new syndicates?

 

Production targets are set after consideration of a number of factors, including:

  • Production achieved in previous seasons on the property and on similar farms locally.
  • Our assessment of the productive potential of the farm defined by its soils, contour, micro-climate and our ability to source water for irrigation.
  • Forecast increases in production following development/more intensive management (such as better fertiliser management and re-grassing

 

 

Isn’t farming a risky business to invest in?

 

Farm investments are subject to a number of risks. Weather, prices, government policies and global markets are some of the external factors that can affect farm income and profitability.

However, we believe the majority of these risks can be mitigated through a thorough understanding of farming and farm investments. At MyFarm we do this specifically by:

  • Targeting investment into an industry with strong fundamentals
  • Targeting quality assets  
  • Limiting borrowing. MyFarm syndicates utilise 33% or less bank borrowing
  • Thorough due diligence at the time of purchase
  • Employing good people. MyFarm appoints career farmers with agood track record of performance
  • Rigorous business management
  • Excellent shareholder communication

 That is why some people prefer to invest with us, rather than perhaps go it alone. 

We aim to successfully manage farms through a variety of climatic and economic conditions by focusing on quality assets with low levels of debt and then applying the farming wisdom of our experienced, quality farm managers. MyFarm managers are highly trained, experienced career farmers and some also choose to become investors in the farm business.

We believe that investing with MyFarm is an investment in the economic fundamentals of global food demand growth backed by the security of tangible and valuable physical assets such as farm land and Fonterra shares

 

 

 

 

Why would I invest with MyFarm and not set up an equity partnership/syndicate myself?

 

Because MyFarm offers a fully managed, low hassle option and employs the best people to manage your investment.

  • We provide a formal farm management system and career farmer managers.
  • We identify, syndicate, improve, and manage dairy & sheep and beef farms; it is the only thing we do.
  • We deliver investments that address risk as well as returns. The assets we purchase are of high quality and debt structures in our business plans are conservative.
  • MyFarm’s scale allows us to pass on significant cost savings to the farm businesses we manage through bulk buying. This includes a number of important farm inputs such as fertiliser, cull cows, insurance and even interest rates.
  • We provide an ‘experience’ through participative ownership. As an investor you can elect to become a board member and have close involvement in the governance of your business.
  • We provide a service to sell your shareholding, should you wish to exit early.

 

Can I invest in a MyFarm syndicate without a MyFarm management contract?

 

Yes, but as yet this has not occurred. Sometimes syndicates opt to take over the management of their investment (all or mostly) after the completion of the initial 3 year MyFarm Management contract

 

 

 

What do I get for my investment?

 

Your investment is solely into the farm business you select. You become a shareholder (or partner) and, if desired, a Director of that farming business which owns the land, stock, plant and, if relevant, the Fonterra shares.

Your principal return is, of course, cash returns which should commence during or at the end of your first year’s ownership. Traditionally dairy farms have also performed well during times of inflation with asset values increasing on average by 3% above annual inflation.  This should be reflected when you sell your units in the partnership or the farm is sold.

A secondary but important factor is that you should enjoy your investment; both the quality of the information that you receive and the relationships that develop

 

 

 

 

Can I invest in more than one MyFarm syndicate?

 

Yes.

MyFarm dairy investments mean you can own a share of the New Zealand dairy industry for as little as $250,000. You have the flexibility to invest more than the minimum in one farm syndicate or make several investments across multiple farms

 

 

 

Will I have to top up my initial investment at a later date?

 

No.

The investments require an initial investment only. There is no requirement for you to introduce capital at a later date. However there may be share sales or new capital development within syndicates (such as deciding after three years of ownership to buy a neighbouring block) that could allow you to increase your investment into the business if you chose, but this would be entirely your choice, and not an obligation

 

 

How do I get out of my investment?

 

A MyFarm investment is a medium to long-term investment. If you need to redeem your investment in three to four years perhaps this is not the investment vehicle for you. This said even when you plan for a medium term investment there can be unforeseen circumstances that arise which mean you may be required to sell your shares.

You can realise your investment in a MyFarm dairy syndicate when either the farm business is sold or through a share sale managed by MyFarm. MyFarm dairy syndicate shares are sought after and typically sell at valuation within 2-3 months. 

MyFarm also operates MyFarm Trading, which is an internet based unregistered securities trading facility for the buying and selling of investments in dairy farm syndicates serviced by MyFarm. MyFarm Trading operates as a private secondary market using the Unlisted trading platform

 

 

 

 

How often can I visit my farm investment?

 

As an owner of the farm business you are entitled to visit the farm. However we would ask that investors respect that these are working farms with very busy managers operating them. It is best to check (via the MyFarm supervisor) if the day and time you wish to view the farm is suitable for the on-farm manager.

MyFarm arranges one farm field day each year.

 

 

 

Who are the other investors? Will we get on?

 

MyFarm strives to match like-minded investors to each farm investment. We do this by convening a conference call meeting when the investment group is close to formation. The objective being to;

  • Introduce interested investors to each other
  • Consider any due diligence items that have arisen
  • Discuss the business plan
  • Discuss the key terms of the Partnership agreements and the acceptability of the MyFarm property management agreement.

As a MyFarm investor each shareholder is entitled to be nominated for the Farm Board and can participate in the governance of the farm keeping a close eye on their farm investment.

We like to ensure the investment is inclusive and fun for all investors. This often means organising social get togethers for investors around on farm meetings and annual general meetings. We also encourage our investors to attend our biennial MyFarm Conference.

We can’t guarantee you will like all your fellow investors, but you are all have one thing in common - the property you have invested in.

 

 

When will my investment generate a return - when will I get my first payment?

 

The date of the planned first payment to investors is detailed in the business plan for each investment. MyFarm generally forecasts cashflow for payments to begin 9 months following establishment. However it is the Board of Director’s decision at this point as to whether payments are made to investors or used to repay bank debt.