An investment syndicate is an association or union of people who have come together to pool their funds and/or resources in order to handle a large transaction. Coming together as partners allows them to engage in a transaction that otherwise might be unattainable to an individual. The advantages to you, as a member of the group is shared risk, as well as governance and reporting as all syndicate functions are handled by a syndicate manager.
At Syndex, we use the terms ‘syndicator’ (meaning the Issuer of a security), ‘syndicate’ (which refers to a fund or investment vehicle like a limited partnership) and ‘syndication’ (the process of securitisation or “packaging” of an investment asset or assets), mostly in reference to commercial property, as is the industry norm in New Zealand. These terms however, are a few of many that can be used synonymously to describe types of investments and the manner in which they are structured, and ultimately offered and acquired by investors.
Broadly speaking, the investments we support and offer via the Syndex platform all have one thing in common; they’re held by groups of investors, that each hold a portion or percentage of the investment, and in so doing, share the risks, costs and ultimately, the financial benefits of being invested.
Since the 2008 global financial crisis we’ve witnessed a process often referred to as the “democratisation of finance”, which is essentially the swing by investors from more traditional, publicly traded assets (like shares or equities) to privately held assets. This has been achieved by investors pooling their resources to acquire assets that they simply cannot access directly on an individual basis. Industries like crowd sourced funding is a prime example of democratisation at play, where through cloud-based technology, investors can collectively participate on an equity basis in businesses across the spectrum, from start-ups to mature businesses looking to expand and grow.
In an effort to find a collective noun for the many types of investments and to bring all these groups and terms together we coined the phrase ‘proportionally-owned’ to describe how an investor was going to access and hold an asset. “We determined that it was important to use terminology that had a literal interpretation and demystified the process of investing. ‘Proportionally-owned’ was, in our view, the best way to explain the process and relationship between all these partners, providers, products, Issuers and investors”, says Jenkins, Syndex Founder.
Syndex provides access to a range of alternative investments that include horticulture, agriculture, viticulture, commercial property and private equity. The opportunities on offer provide investors with access to attractive investment returns and in the case of real assets, such as agriculture, a good source of assets that have a low correlation to traditional public markets, an essential part of any well-diversified portfolio.
A common deterrent to proportionally-owned alternative investments is its illiquidity. The syndicator, by deciding to list on Syndex, empowers their investors to manage their exit from an investment on a secondary market that is operated (at arm’s length from the syndicator) in a fair, orderly and transparent manner, thereby ensuring that a market-related price is struck between the buyer and the seller.
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Financial investment involves risk of loss - please seek professional advice before making any investment decisions. The views and opinions expressed in this blog are those of the authors. The information we present is of a general nature and should be used as a place to start your own research. It is not intended as investment or financial advice.