Wholesale
Country & Co Advisory Limited

Southland Dairy Equity Investment

Agri-Business

Register Interest

WARNING

The law normally requires people who offer financial products to give information to investors before they invest. This information is designed to help investors make an informed decision.

If you are a wholesale investor under the definition of that term in clause 3 of Part 1 Schedule 1 of the Financial Markets Conduct Act 2013, the usual rules do not apply to offers of financial products made to you. As a result, you may not receive a complete and balanced set of information.

You will also have fewer other legal protections for these investments. Ask questions, read all documents carefully, and seek independent financial advice before committing yourself

Transaction Size
NZD 7,500,000.00
Share Price
Minimum Investment
NZD 750,000.00
Issue Type
Agri-Business
Sector
Dairy

The opportunity exists for wholesale investors to express interest in Southland Dairy Equity Investment.

Quality high performing 381.1357 hectare dairy unit on doorstep of Gore, location is considered tier one in Southland. Immaculate infrastructure comprising 54 bale rotary automated cowshed, four houses, and new effluent system. The equity syndicate will also purchase 180,000 shares in Fonterra Co-Operative Group. 

Management will be incumbent high caliber herd owning 50:50 sharemilkers with proven track record in performance. They operate in top 10%, one of the sharemilkers will also own 25% of the land owning entity.

The focus will be on delivering sound shareholder returns paid on a monthly basis. This is an exciting new dairy investment opportunity for June 2022 ownership.

  • 381.1357 hectares (351 hectares effective) currently peak milking 1071 cows and produced 530,476 kg MS in the 2020/21 season (495 kg MS/cow and 1,511 kg MS/hectare)
  • 5 km west of Gore which is an excellent location for staff and future resale.
  • Balance of soil type with 90 hectares currently irrigated via two centre pivots.
  • Very good standard of infrastructure overall with a centrally appointed 54 bale rotary cowshed and four houses. New state of the art effluent system, silage pads, and array of sheds complement the property.
  • Farm will be set up as a land owning entity with management being a herd owning 50:50 sharemilker who are the incumbent management.
  • One of the sharemilkers (who is the current vendor) will invest a 25% ownership shareholding in the new equity syndicate land owning entity which sees them have plenty of “skin in the game” and commitment to succeed. 
  • The 50:50 sharemilking structure means the operational risk of running a dairy farm largely sits with the sharemilker which therefore mitigates risk for the land owner.
  • The milk pay-out environment has returned to levels where sound operating profits can be achieved. However rural businesses need to remain robust to move through another downturn without incurring cash losses. Therefore this investment is well capitalised with 60% equity or $10,000,000 and a breakeven milk price of $4.54/kg MS on average. The Fonterra milk price in previous ten seasons has averaged $6.44/kg MS.
  • The investment is forecast to return a pre-tax gross return on equity yield of 6.40% per annum. This annual return is proposed to be paid on a monthly basis to investors once cashflow is established in line with this memorandum. Would suit discerning investors who are looking for quality land holding.
  • The long term fundamentals of the dairy industry based around protein demand and population growth remain. New Zealand still has a good advantage, providing grass based systems remain the focus. The rural sector has been the shining light for the NZ economy in these current Covid times.

For further information, see the flier by clicking on the Documents tab. To be put in contact with the issue manager and receive access to a full Information Memorandum click to Register Interest.

IM Gore executive summary October 2021
October 29, 2021
29/10/2021

Country & Co Advisory Limited

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