Its been a very exciting start to the year at Syndex. We’ve seen over $1.7m of investment units changing hands over the last week, demonstrating how a vibrant Secondary Market can facilitate good outcomes for both buyers and sellers of infrequently traded assets. Brilliant!
We have also seen an interesting article written in the New Zealand Herald over the weekend, click here to read. This confirms what many of us believed for a number of years - that the dairy industry is in need of new capital for sustainability and growth. The two recent tough years of low milk payout has taken a toll on many balance sheets, at a time when increased environmental costs, changing demographics and the ongoing quests for greater efficiency are creating the need for more investment.
The outlook for dairy as part of the NZ food opportunity is still strong but we need as a country and industry, to be match fit.
Farming businesses do need to be well capitalised to grab the opportunity and there are potential good returns for all investors - both operators and financial investors. What we forget sometimes, is the additional skills that new investors can bring to a business. For example, there are a number of retired farmers who have either sold their assets or freed up capital from their business with a lot to offer less experienced farmers as investors and mentors. We would love to see newer operators in the industry benefit from the new capital and “old” heads and would encourage retired or experienced farmers with capital, skills and time to consider the ongoing contribution they can make to the sector.
Similarly investors from non-farming backgrounds can contribute skills and experience. Sometimes it is governance, business management and/or financial skills that a farming business can benefit from, creating additional value and enhancing returns for all investors.
The great thing is that Syndex offers a market for agricultural businesses to raise capital from these type of sources, and offers investors with different skills, the chance to acquire a proportional ownership in an agricultural asset and potentially make a contribution to its success.
Ross Verry is CEO of Syndex and a shareholder. The views expressed above are purely his own. Please assess and research all your investment.