Hop Revolution's hop garden at Tapawera. Photo / Supplied
Hop Revolution's hop garden at Tapawera. Photo / Supplied
Farm investment manager MyFarm is looking to raise up to $100 million to start a new fund which would invest across a range of horticulture businesses and potentially list on the stock exchange in three years.
The Kakariki Fund will aim to invest in orchards, vineyards and farms which willbe co-managed by horticulture processors and exporters including honey producer Comvita, Kiwifruit company DMS Progrowers, Sacred Hill wines, apple growers Rockit Global and craft beer hop grower Hop Revolution.
Andrew Watters, chief executive of MyFarm, said the fund was the first time it was rolling up a number of horticulture property investments into one fund.
"What we have tended to do before is private syndication for a single property."
That had seen the investment manager raise $165m for investment into 18 individual orchard, vineyard, hop garden and manuka plantation businesses since 2015.
But he said investing in one property was riskier as it was linked to what was going to happen to the market for that particular produce and the value of that one piece of land.
"The benefit of the fund is that you can diversity across a whole range of crops."
The fund is only open to wholesale investors with a minimum investment of $100,000 but Watters hopes it will grow big enough after three to list on the share market which would open it up to retail investors.
The fund has four initial properties in its sights; a Kiwifruit orchard in the Bay of Plenty, a 50 per cent share in a 130 canopy hectare hop farm, 35 canopy hectares of Rockit apples and a 2000ha Manuka plantation development.
"If we raise the $100 million we are seeking we can go live with $40 million to cover the four properties."
As the fund raises more money it would target another eight properties, he said.
Andrew Watters, chief executive of MyFarm. Photo / Supplied
The fund is targeting a return of 10 per cent per annum from earnings from the sale of crops and land revaluations.
Watters said tighter bank credit and the clamp-down on overseas investment meant there were good opportunities for the fund to step in and buy horticulture land.
"There are plenty of opportunities but we do need to work hard to get them."
He said there were a lot of smaller blocks on the market which were not suitable and it also wanted to target modern varieties of crops.
In some instances it was buying dairy land and converting it to horticulture.
That was the case for a proposed hops farm it was targeting near Nelson.
Jason Judkins, chief executive of Hop Revolution, which will manage the farm and manufacture the hops into a pellet form to sell direct to brewers, said the investment meant it could puts its resources into farm management and marketing.
It already has another hop farm nearby which is owned by a MyFarm syndicate.
Judkins said its hoped to convert the dairy farm to hops in stages starting from the end of this year with the first harvest in March 2021 and a full harvest by 2022.
The hops are turned into pellets which its hopes to sell to local craft brewers and export into the United States direct to brewers there.
"New Zealand hops are highly regarded but have been difficult to source by offshore brewers. The growing climate in Nelson and the iconic varieties we offer represent an exciting proposition to brewers, which are constantly looking for new tastes and flavours."
Jason Judkins, chief executive of Hop Revolution. Photo / Supplied
The new farm would double its production and allow it to supply more brewers in the US and look to other markets.
Kakariki will have an annual management fee of 1.25 per cent and will take 20 per cent of the return for any return above 10 per cent per annum.
