What is it called and what sort of savings product is it?
Rural Portfolio Capital is seeking to raise up to $60 million through a redeemable preference share offer.
Who is the company behind it?
Rural Portfolio Capital is owned by Rural Portfolio Investments, the
farm servicing company set up by former Fonterra boss Craig Norgate. It holds a 30 per cent stake in listed company PGG Wrightson, and an 8.1 per cent stake in NZ Farming Systems Uruguay.
Who is the target market?
It appeals to fixed-interest investors prepared to take on quite a bit of risk.
What return does it offer?
The shares have a gross dividend of 9.75 per cent paid twice a year. This rate may change over the life of the shares as it is set against the four-year swap rate.
When was it launched?
March 26.
What other products is it like or is it competing with?
Its nearest competitor at the moment is the Allied Farmers capital notes profiled in last week's Money at Work column.
Is it long term, short term or medium-term?
Medium term, with a maturity date of April 15, 2011.
What is the unique selling point?
The yield is seen to be in the ballpark, but isn't overly attractive for the level of risk being taken on. Investors "do get the potential to participate in any future public offers" of shares in Rural Portfolio Investments.
How strong a stomach do you need for it?
As with the Allied product, reasonably strong.
What's the hitch?
Things investors have to think about here is whether they want exposure to the rural sector in New Zealand (which hasn't performed too well on the sharemarket) and whether the return offered (currently 9.75 per cent) is adequate for the risk being taken on. There are other capital notes and the like around which offer similar rates. Also, the money raised is being used to redeem earlier preference shares and retire debt as opposed to being used to fund growth.
