Rockit taking second bite to fund growth

Murray Denyer (left), of the Havelock North Fruit Company, Steve Saunders, Phil Alison and Rob Craig after the Rockit apple won the New Zealand-Taiwan Business Excellence Award last year.

The Rockit apple, an export success largely funded by Tauranga Enterprise Angels investors, has launched the second phase of its 2014-15 financing round.

It seeks a further $3 million to fund new hectarage and market development.

Stage one of Rockit Orchard No2 Limited Partnership (ROP2) last year was over-subscribed, raising $3.8 million of the $6.8 million amount sought, said Steve Saunders, a director of Havelock North Fruit Company (HNFC), which controls the cultivar. The Rockit is a golf ball-sized apple marketed in a tube format as a high-end convenience snack.

"We are under budget and ahead of our targets in terms of production," Mr Saunders told Enterprise Angels members at their bi-monthly meeting on Tuesday.

The initial limited partnership in 2012 established 65.9ha of Rockit plantings and a further 28ha had been developed with the first tranche of the second partnership, he said. The aim was to add a total of 55ha under ROP2. The partnership develops bare land under 18-year leasehold agreements.

Subscribers to the initial partnership were expected to see a distribution of $1 million this year because HNFC was well ahead of its initial projections, said Mr Saunders. The projected investment rate of return was 26 per cent annually over the life of the partnerships, but to date investors had seen an average return of more than 40 per cent year on year, he said.

The apple was being marketed under a model Mr Saunders likened to that adopted by kiwifruit single point of entry marketing organisation Zespri, and had even tapped into some of the same companies Zespri uses in Asia to market and grow off-season kiwifruit.

"Being counter-seasonal, all northern hemisphere partners will have ongoing demand for New Zealand-exported fruit during their off-season," said Mr Saunders. "We therefore expect export demand to be strong for locally grown Rockit."

Mr Saunders said its international growing agreements allowed the company to review partners' plantings after three years to maintain control over volumes.

It has also just commissioned a purpose-built packhouse in Havelock North and has widened the range of its packaging tube sizes.

Mr Saunders said existing investors had already indicated they would commit more than $1 million to the second round, but noted timing was tight as round two would close at the end of this month.

Director Murray Denyer said the plant variety licence extended from 23 years in New Zealand up to 35 years internationally, depending on the regulations of the country, and ran well beyond the life of the syndicates.

"The underlying IP is very similar to a patent and depends on the jurisdiction," he said.

"But the life of the syndicate is 18 years, so everything is about getting the returns over 18 years."