Rural crows over poultry fund
RuralFunds Management(RFM) has launched a new unit trust, the RFM Chicken Income Fund, which will invest in chicken meat production.
The new fund will invest in 10 chicken farms, which it will acquire for $35.2 million from Bartter Enterprises at Griffith in New South Wales.
Investors will be raising $22 million of the purchase price with the rest funded through debt underwritten by GE Capital.
RFM managing director David Bryant says the strategy for the new fund is to provide investors with competitive returns generated by contract chicken growing.
“We will produce six crops a year which will be sent to Bartter’s processing plants, which process 2.3 million chickens a week,” he says.
The minimum investment in the chicken fund is $10,000 and the first quarterly distribution is from March, 2004, which is expected to be four cents a unit. Bryant says the yield is expected to be about 13 per cent, with a total distribution for the year at about 15 cents.
There is no tax-effective component, as the fund is a typical unit trust, with investors owning the assets.
The investment is liquid, with redemptions occurring annually. Management fees have been set at 1.25 per cent. There is a trail of 0.75 per cent on funds under management. If returns exceed 15 per cent, there is a success fee of 15 per cent, payable to RFM.
Bryant is hopeful there will be capital appreciation on the investment, as chicken consumption in Australia is rising. According to industry figures, poultry meat consumption in Australia is 32.8kg per person. This is almost equal to Australia’s combined consumption of beef and veal.
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