Interest in private investments is on the rise in NZ.
A worldwide trend for ‘alternative’ private investment opportunities is beginning to show up in New Zealand and is proving attractive for both younger and older investors, depending on the type of opportunities and cost of entry. Another surge in take-up could be expected now as we enter a global recession; a similar pattern emerged from the GFC as investors sought less volatile assets.
Ross Verry, CEO of online investment platform Syndex, says opportunities in areas not often seen, for example kiwifruit, hops and avocados, are piquing the interest of investors.
“Our feedback is that investors are now looking wider and are able to find some interesting investments for their portfolios,” he says. “Millennial investors are interested in these types of investment, that offer attractive returns and are often aligned to their desires and values, and we are looking at ways to make it more accessible for them, because one of the challenges they face is the size of the minimum investment.
“Our investment offers can have low entry points (the lowest on the books being $9726) but we are working on structures in which it may be possible for people to invest smaller amounts.”
“There are also many investors searching for yield and income in the low interest rate environment and they have been attracted to some of the innovative horticultural land opportunities as well as traditional property syndications.”
Verry says there was increased focus on private investments in 2019 with a wide range of opportunities being snapped including medicinal cannabis, agri-tech, property and med-tech.
“Agriculture and food production are also more attractive sectors for external investment with good fundamentals and low correlation to traditional investments, and I think investors are now beginning to recognise this,” he says.
Syndex doubled assets under its administration in 2019 alone to $2.8b. This reflects a global rise in alternative investments which have outpaced growth in stocks and bonds since 2008, growing 14.6% per year. Overall, alternative investments account for 7.2% of the global investment market – a new all-time high.¹
Verry says an increasing number of businesses are looking to the private market to raise funds which matches well with people looking for alternative investments away from more traditional avenues such as public stocks and bonds.
Horticulture receives strong interest and an avocado farm listed by Syndex in 2018 attracted an ‘unparalleled’ response. “The reasons for this are hard to determine – but avocado’s being heralded as a new superfood, plus owning a slice of a real orchard meant interest was high; only those at the front of the queue got the gold,” Verry says.
“Investors are attracted to land ownership that’s complemented by good and established operators producing off the land. When the results are positive yield and capital growth investors are happy.”
“In the five years since it was set up Syndex has built a system and infrastructure (including a share registry and secondary market) that will set a company or syndication on a footing for growth,” Verry says.
“We are an online platform for proportionally-owned investments and are focused solely on the private market; we provide tools to support both issuers and investors and a central place to find offers.”
The company has also created a secondary market enabling investors to list and sell their investments if they need to.
“This is something that has always been a point of contention in private investing – the ability to exit an investment,” he says. “We know things can change, other interests might need cash, investments need to be sold, family may need support, retirement might mean time to cash up.
Up until now this has been very difficult for private investors in syndication or proportional ownership models.”
For more information on services provided by Syndex go to: www.syndex.exchange
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¹ https://www.fidante.com/-/media/Fidante/resources/Articles/20190331_AI.pdf?la=en
