Agribusiness schemes improve while numbers fall

Despite a decline in retail agribusiness investments and some schemes being hit by late product rulings, there has been an improvement in the quality of investments being offered this year, according to Adviser Edge managing director Shane Kelly.

Adviser Edge has recently named its top-rated investments, with two timber managed investment schemes and a grape project picking up four-and-a-half stars out of five.

Gunns’ veneer and pulpwood projects, together with SAITeys McMahon’s Treviso Table Grape scheme were the only projects to receive the high rating.

Seven other projects scored four stars and these included Willmott’s pine project, Rural Funds Management’s premium vineyard investment, Timbercorp’s almonds and eucalypt projects, and Palandri’s US wine business scheme.

Kelly says the improvement in the quality of the retail agribusiness investments on offer this year should create an advantage as the schemes seek investors.

“The industry has taken stock over the last two years, improved the quality of their offerings and now stands ready to lift funds flow into the sector for the first time in four years,” he says.

“Gunns is likely to consolidate the company’s number one market position and with $65 million raised in 2001/02, the company is set to dominate funds flow into the sector.”

Kelly says the success achieved by Gunns in the past two years is influencing how other timber schemes are put together, with the market showing a preference for timber projects with upfront and deferred fees. As such, he says there are fewer projects with ongoing management fees.

While project numbers have dropped during recent years because of pressure from regulators, Kelly says the rationalisation is just about complete.

“It was the correction the industry needed. Now we have a very sustainable number of project managers who will continue to diversify their product offerings.”

It is believed about 40 projects made it to market in this financial year, down from last year’s offerings of approximately 55 projects.

Some of this year’s schemes have also been hit by the late issue of product rulings by theAustralian Taxation Office. Olive schemes seem to have been the hardest hit with only four projects being offered at present.

Kelly says the other issue that has hit the industry this year has been the removal of estimates of the financial returns of the projects as theAustralian Securities & Investments Commission(ASIC) enforces its new policy statement PS 170.

“ASIC has made the new ground rules very clear. Where it believes there are no reasonable grounds for inclusion of financial forecasts, the project manager will have to remove and re-issue the offer document,” Kelly says.