Poverty Bay Rugby Football Union sets up investment fund

TEAM MATES: Poverty Bay Rugby Football Union chair Hayden Swann with Craigs financial adviser Adam Lynch. Picture by Paul Rickard

Poverty Bay Rugby Football Union is going it alone.

It has opted out of a nationwide combined union “super fund” and instead set up a $400,000 reserve investment fund.

In June, New Zealand Rugby (NZR) provincial unions approved the Project Future partnership between US technology investment firm Silver Lake, NZR and the New Zealand Rugby Players' Association (NZRPA).

Poverty Bay Rugby Football Union chairman Hayden Swann said under the agreement the union had received $500,000 from NZR, while the eight clubs affiliated with the union had started to receive either $10,000 or $20,000.

A further $100,000 a year would also be provided to the union by NZR for its day-to-day operations, dependent on the union meeting targets.

Mr Swann said $400,000 had been invested with Craigs Investment Partners.

“We chose Craigs because it's about community and values. We are a strong believer that if you have the values and culture right, then things happen both on and off the pitch.

“Then we looked at what we are going to do with the money.

“NZR said to provincial unions that they want us to put at least $400,000 of the $500,000 away for a reserves fund because NZR's own reserves were quite depleted through Covid.

“They found at that time that a lot of unions around the country didn't have much in the way of reserves.

“Secondly they wanted us to use the remainder ($100,000) to invest in our local community game through the next three to five years in a strategic plan.”

That would involve employing more staff and increasing school visits to strengthen participation numbers, particularly at high school level, as well as in women's and girls' rugby.

Mr Swann said the $400,000 reserve fund would remain invested for about 20 years.

He noted that it could not be used for other projects like the union's new grandstand rebuild.

“This is a long-term strategy with Craigs to grow that $400,000 and at such time future boards can look to draw some of that money down.”

Mr Swann said several unions were investing together in a “super fund” through an Auckland company.

“However, we felt having a local presence was going to be best for our investment . . . someone who has been here for a long time and who we can have direct contact with.

“There were strong calls from the other unions to put it all in together but we felt it was better to keep it invested locally.

“By having a reserve fund, which we have not been able to have before, it is a relief to know we have our own independent backstop.

“It means we don't have to go back to NZR to help out. We have never been in that position but it's great knowing we have that long-term security.”

It was also hoped the relationship could lead to more corporate sponsorship opportunities, he said.

“We have to look at every commercial opportunity for our new facilities.”

Craigs Investment Partners Gisborne-based financial adviser Adam Lynch said at a targeted annual return of 5.7 percent, the union's $400,000 investment could be expected to rise another $100,000 in the next 10 years.

“We have a balanced portfolio so it's about 60 percent in growth assets, which are shares, and then 40 percent in bonds and defensive assets.”

Nationally, Silver Lake invested $200m in NZR for a minority ownership percentage of a new company (NZR Commercial Co.) of which $7.5m will go to rugby clubs, $2m into Maori rugby and $20m into provincial unions.

There will also be a $60m contribution to a new legacy fund, an amount set aside to invest in growth and various investments across the game.

The balance of funds after costs will form an injection into NZR reserves to safeguard the game against future financial disruptions.