Investment bank First NZ Capital (FNZC) has made its first move into direct property investment in a 50:50 joint venture with property financier, Pearlfisher Capital.
The move should bring new capital to assist the expansion of Auckland property developments as the industry gears up to meet growing demand.
The partnership
between FNZC and Pearlfisher, will enable co-investment in lending activities alongside third party investors.
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Pearlfisher currently offers funding to the market through high net worth individuals and trusts participating in transactions that suit their specific risk appetite.
It has funded a variety of developments since its inception six years ago, including residential land subdivisions, multi-unit town houses, high rise apartments and suburban retail developments.
As part of the joint venture, FNZC will be represented on Pearlfisher's Board providing valuable additional governance and structure as well as access to a significantly wider funding base.
The principals of Pearlfisher Capital, Tony Abraham and Jarrod Bruce, said the partnership will provide the potential for Pearlfisher to gain considerable scale in the medium term and assist with the markets current non-bank funding constraints.
"Having our own capital to co-invest in projects will be an important development for the business, and will attract a broader and more diverse range of investors," they said in a statement.
"The partnership allows us to take advantage of the strong development cycle and consider a wider range of projects in a climate when the major banks are increasingly constrained by capital adequacy rules, compliance and tightening credit criteria."
The net result being was they would be assist in funding more projects at a time when there was a demand for the delivery of additional housing, they said.
Managing director, head of securities at FNZC James Lee said the partnership provided FNZC with an exciting growth avenue that diversified its client offering into a market many did not have access to.
"Property remains New Zealand's largest investment class, for many of our clients it is their largest asset exposure," Lee said. "The trends of a structural under-build, record immigration and the recent changes in the availability of bank funding will continue to provide disciplined lenders, with attractive risk/reward opportunities."
