NZ Rural Land lists, may come back for 2021 - Rob Campbell

NZ Rural Land Co plans to invest first in dairy farms. Photo / Supplied

New Zealand Rural Land Co (NZRLC) chairman Rob Campbell says the newly-formed property investor plans to raise more capital early next year after just managing to get its initial public offering (IPO) over the line.

NZRLC listed on the NZX today after its fundraising came in at the bottom end of $75 million to $150 million target range, helped along by a last-minute $750,000 injection from Allied Farmers.

The stock - which was to have debuted on last Friday - listed at $1.31, a small premium to its $1.25 issue price.

The IPO, lead managed by Jarden, garnered strong support from some institutional investors such as ANZ New Zealand Investments, which ended up with 9.9 per cent.

Others opted to take a wait and see approach.

"You can always talk a big game when you start something," chairman Rob Campbell told the Herald at an NZX function for the company's debut.

"We believe that we can spend $75 million on projects that we have on our books quite quickly," he said.

"And one of our intentions is to be back in the market with a capital raising reasonably early in 2021," Campbell said.

"When we get the first few deals done within the time scale, we will promptly be back for more, because we think that this is something that has got potential in the future," he said.

NZRLC chairman Rob Campbell. Photo / Supplied

Co-founder and Elevation Capital manager Chris Swasbrook said NZRLC had been two-and-a-half years in the making.

He thanked Allied Farmers, which will part of the management company for NZRLC, for its support.

"It has not been a smooth ride, but we got there in the end," he said.

Swasbrook said it would have been a "sad indictment" on the capital markets if NZRLC - a real estate investment trust - could not gave gotten off the ground.

In the IPO phase, Swasbrook said potential investors were wary of the offer because NZRLC did not have assets.

"The market was very mixed - segmented into those who backed us, and those who wanted to wait and see, and who may join later," he said.

NZRLC plans to invest first in distressed dairy assets, but may in time branch out into other primary sector property opportunities.

Its offer documents say it would be an agricultural sector landlord only, leasing rural land to experienced tenants under long-term leases.

The company plans to buy rural land using a combination of the equity funds and debt not exceeding 30 per cent of its total assets.

The management company will be 50 per cent owned by Allied Farmers and 27.5 per cent by Elevation Capital.

Swasbrook will also join the board of Allied Farmers.

Foreign ownership of NZRLC is limited to just under 25 per cent, which means it will not be constrained by Overseas Investment Approval rules.

NZRLC's offer documents said market conditions currently favour acquiring rural land in the dairy sector.

The company has identified 21 dairy properties, all in the South Island but not on the West Coast.

NZRLC said the agricultural sector, particularly dairy, historically had a high reliance on debt funding as the primary source of capital.

However, lending appetites had changed within the banking sector and lending had become significantly constrained, particularly to the dairy sector.

Between 2003 and 2019, dairy debt has grown by more than 267 per cent while total overall loans grew in the agricultural sector at 192 per cent.

Dairy debt now accounts for 9 per cent of overall loans and 65 per cent of agriculture loans.

NZRLC was the sixth company to list on the NZX this year.

Exchange chief executive Mark Peterson said he was optimistic about the market's capital raising prospects for 2021.