Dairy investment fund promoted

Havelock North corporate farmer Cliff King is travelling the country with Andrew Watters promoting an Initial Public Offering that his company will manage called Pastoral Dairy Investments (PDI).

PDI gives people the opportunity to invest in a portfolio of New Zealand dairy farms for a minimum investment of $20,000.

It aims to raise $25 million from public investors and $50m from institutional investors.

MyFarm will manage the farms the fund buys after the offer closes on April 20. My Farm manages 47 dairy farms on behalf of investors but their syndicate model is for Eligible investors only - with a minimum investment of $250,000.

MyFarm director Andrew Watters, a dairy farmer, former Sharemilker of the Year and Nuffield Scholar, said MyFarm's normal syndicate investment model "shuts out normal investors so we put together this fund".

He said he was surprised there were not more dairy funds.

"Of all the agricultural industries dairy stands out for dividends and capital growth.

"We are not going to raise any debt and we will buy seven or eight large dairy farms. The objective of which is to pay 5-6 per cent dividends, paid quarterly. Traditionally farms have grown in capital value. From 1995-2010 the average dairy-land-for-sale prices were up 5.8 per cent per annum and the milk price went up went of 6.4 per cent per annum."

He said MyFarm had out performed the indices through its core task of buying and developing farms.

"Since 1990, when Cliff set up the business our actual return to the investor has been 21.7 per cent per annum - but we are not promising that."

Mr King said large farms had "a little bit of grunt to them".

"Plus it is the cheaper end of the market to be buying - there are less people around with that kind of money."

He said Hawke's Bay dairy farms were a likely target of the fund, which is familiar territory for him.

"Jan and I drew a ballot in Wairoa in 1968. We farmed in the back country for 10 years and prospered. We bought up other farms and then we moved to Havelock to educate the family and we haven't moved.

"During the last 30 years we have increasingly moved away from physical farming to the business of syndicated farming. I was one of the founders of the Rural Property Trust which was New Zealand's first attempt at public subscription - by vehicle of a unit trust - into farm land ownership.

"MyFarm is an extension of that. We are all farmers and it is our second nature to make the right decisions because we have made plenty wrong decisions over the years as farmers ...

"This fund will not have debt - that lesson is hard earned."