An opportunity to invest in one of New Zealand's success stories - the kiwifruit industry - is being offered in a new orchard near Te Puke in the Bay of Plenty.
The Hereford Park orchard, currently under development by Southern Cross Horticulture (SCH), is being opened to wholesale investors. CEO Andrew Dunstan says until now it hasn't been easy for most investors to share in the industry's success without having third parties in the middle.
Now SCH is offering a direct connection between grower and investment partners.
"Kiwifruit is a New Zealand success story and it's a great chance for investors to diversify their portfolios. Located about 15 minutes from Te Puke it's in a prime growing region, with favourable elevation, climate, and soil," says Dunstan.
The first crops are expected to be harvested at Hereford Park in 2025 and SCH is budgeting for an average return of 10.1 per cent per annum over 10 years.
It is the latest venture for SCH, which has been involved in kiwifruit since 1977. In that time, Dunstan says they've developed a string of successful orchards backed by a specialised 'end-to-end' business model that allows them to control every aspect of the development - from selecting the right site, to building the orchard and managing the harvests.
Dunstan says SCH are big believers in getting everyone's interests aligned which means that the Dunstan family puts its own money into every development. At Hereford Park, they'll be providing 15 per cent of the required equity, "so we have skin in the game, on the same terms alongside our co-investors."
These co-investors will also be co-owners. Hereford Park is a limited partnership, which means that investors will own a proportional share of the land-backed asset.
The development comes at a time when the signs are looking good for the future of the industry. The kiwifruit growers' marketing arm Zespri International's most recent Five Year Outlook is predicting New Zealand's supply of SunGold Kiwifruit will increase from 84 million trays in 2020-21 to 128 million trays in 2025-26.
Zespri also reports that last year's total sales of all varieties, at 180 million trays, was a 10 per cent increase on the previous financial year, while global revenue generated by fruit sales increased by 14 per cent to $3.58 billion.
Dunstan believes the Covid-19 pandemic had a silver lining for kiwifruit. "Covid's been challenging for everyone but there has been an increase in consumer demand for healthy, nutritious food," he says. "Zespri's most recent annual report notes that 'one of the most popular searches on Google in 2020 was for foods high in Vitamin C'."
With 26 active sites, over 100 team members and 200 seasonal workers Dunstan says SCH develops 80-100 hectares of new orchards every year. "I've personally done nearly every job you can do in developing an orchard – it's better to do it once and do it right; we'd rather develop 100 hectares to a world-class standard than do 150 hectares poorly."
Innovation helps SCH achieve world-class standards; it was one of the first to adopt the original Gold and SunGold varieties when they became available.
Now, Dunstan says, SCH are at the forefront of Zespri's latest innovation, the RubyRed variety which is expected to appeal to premium markets. SCH was part of the extensive pre-commercial trials of this new variety, and RubyRed will make up around a quarter of Hereford Park plantings. The rest will be planted in SunGold.
SCH's values also support the company's innovation and its strong track record. "We value excellence," says Dunstan. "This means we constantly challenge ourselves to be better today than we were yesterday."
Teamwork is another core value, and SCH is organised into specialist units with industry-leading expertise, like investment or orchard construction, so that together the business achieves more than if they were simply a collection of generalists.
Dunstan will be explaining the Hereford Park opportunity in two free webinars on 25 November at 7.30 pm and 3 December at 12 pm, along with David Hay from investment bank Antipodes Capital.
SCH has also created a website to help potential wholesale investors understand this opportunity, their family business, and the kiwifruit industry. "We'd welcome wholesale co-investors who share our values and our long-term view," Dunstan says. "It's an opportunity to diversify where we specialise."
Disclaimer: This is not a regulated offer for the purposes of the Financial Markets Conduct Act 2013 (FMCA) and is not an offer of financial products to the public. Any offer will be specified in a separate information memorandum. SCH offers are only open to investors who fall within the exclusions applicable to offers made to "wholesale investors" as set out in Schedule 1, clauses 3(2)(a) to (c) and 3(3)(a) to (b) of the FMCA. SCH requires investors to certify that they fit within one of the above categories of wholesale investors in order to be eligible for consideration to participate in an investment. All prospective investors are recommended to obtain independent professional advice.
Register now for the webinars. For more information go to: The Hereford Park orchard