The MyFarm KiwiFruit Fund Limited Partnership is scheduled to hold its inaugural quarterly auction of shares starting mid-morning on November 5, concluding two days later. Pre-registration was mandatory for wholesale investors aiming to participate in the bidding process.
This fund amalgamates 13 orchards in Bay of Plenty and four in Northland, all cultivating the SunGold kiwifruit variety, alongside associated Zespri shares, positioning it as one of New Zealand's substantial kiwifruit investment entities. The orchards, initially independent MyFarm syndicates from 2017 to 2022, have been consolidated into a single entity covering 160 canopy hectares, which collectively produced in excess of 2 million trays of SunGold kiwifruit earlier this fiscal year.
MyFarm, leveraging its established operational management and leasing expertise, will oversee the fund's management. With assets nearing $200 million, the fund aims for a 10% annual return to investors, factoring in both cash and capital growth post-fees, and anticipates a quarterly cash distribution at an approximate rate of 7.5%.
The investment strategy includes maintaining around 15% of its assets in Zespri shares, which are exclusively available to growers and have historically yielded gross returns between 15-25%. Currently, the fund possesses 2.28 million Zespri shares, priced at $4.05 each, with plans to augment its shareholding.
Andrew Watters, CEO of MyFarm, highlighted the fund's advantages stemming from its scale and the potential for reduced operating and financing costs compared to individual partnerships. Founding syndicate investors have been allocated units in the fund equivalent to their initial investments.
Furthermore, the fund's shares are tradable on the Syndex exchange throughout the year and are subject to quarterly auctions, the first of which is set for November. The fund stipulates a minimum holding of 20,000 units, equating to a minimum investment of $20,000, with the latest traded unit value at 85c. It reports $85m in drawn debt against $192m in assets, resulting in a loan-to-value ratio of 44%, and investor funds stood at $113m as of August 31.
For the 2024 harvest, the fund's orchards achieved an average orchard gate return of $152,000/ha, aligning with the broader Zespri G3 average, albeit with returns ranging from $225,000 to $90,000 across the portfolio, indicating the potential for yield optimization.
Source: Farmers Weekly