Investing back in New Zealand, while diversifying away from listed markets
Over the past five years an important direction for Booster has been directing part of our clients’ money towards investments in ‘unlisted’ assets outside the traded markets. We have actively pursued this with many funds within the Booster KiwiSaver Scheme, Booster Superscheme and multi-sector investment funds having a moderate allocation to unlisted assets (more detail can be found in the relevant fund fact sheets). We believe it’s an important direction for a range of reasons
- Looking beyond the listed markets gives access to different sources of return – adding breadth to portfolios while also diversifying away from some of the shorter-term volatility and potential irrationality in listed share markets.
- It widens the range of investments available. There are almost 4,000 businesses in NZ with turnover of more than $20m, but less than 200 of those are listed on the NZX.
- We have the opportunity to enhance returns by getting closer to the end user of our clients’ capital – also capturing a potential ‘premium’ to returns as compensation for giving up the ability to trade the investments daily. We don’t mind investing in NZ for the long term (actually we think it makes sense as part of a diversified investment strategy.)
- Importantly, it gives us the ability to help direct some of kiwis’ savings back into New Zealand businesses, helping them stay kiwi owned.
We began with the creation of our Booster ‘Tahi’ fund five years ago, investing directly in NZ businesses – followed by our Private Land and Property Portfolio, and the Booster Innovation Fund partnering with local universities to fund start-ups commercializing good kiwi ideas on the world stage. Most recently we’ve begun allocating part of our fixed interest investments to more direct lending, contributing capital directly back into the economy and sidestepping the traditional bond markets.
Accessing a well-secured income return while supporting local Iwi
Alongside other lenders, Booster portfolios have helped Wellington Iwi Ngāti Toa Rangatira fund the purchase of 40 school properties in the Wellington area from the Crown, under a Treaty of Waitangi settlement. These schools are leased back to the Ministry of Education in perpetuity (so there is no change to how the schools operate). We saw the investment as attractive as it is backed by perpetual lease income from the government, and secured by the value of all 40 school properties – and it’s an investment with a real NZ connection.
Over 250 canopy hectares of vineyard land around New Zealand
A staple of clients’ unlisted land investments are over 250 canopy hectares of vineyard properties across Marlborough, Nelson and Hawkes Bay. These properties are typically held in our Private Land and Property Portfolio and operated by the Booster Wine Group, a top 10 wine producer in New Zealand which is held as a business investment within the Booster Tahi fund.
Helping grow the NZ Hops industry
Through our Private Land and Property Portfolio, investors have a 50% ownership in Waimea West Hops, a well-established hop garden just south of Nelson (pictured to the right). The garden is planted with a wide range of aroma hops, including Nelson Sauvin and the recently released Nectaron varieties. Our investment enables a development of 62 canopy hectares of hops with potential to add further gardens, helping support the growth of this industry in NZ.
Supporting NZ engineering success with Dodson Motorsport
Through the Tahi fund, clients also own a 55% stake in Dodson Motorsport, a home-grown success story with a 20 year history. Dodson specialise in high performance engine and transmission parts like clutches for sportscars like Porsche, Audi, Lamborghini and Nissan Skylines. Their parts have been used by racing teams around the world in setting over 30 world records. The Tahi Fund’s investment has helped development of a new facility to increase production and meet global opportunities.
Through our funds’ investment in the Booster Innovation Fund, clients have a small allocation to early stage businesses aiming to solve big global problems. Some of these include: ZeroJet sell electric electric propulsion systems to eliminate the need for combustion engines on small watercraft. Their mission is to reduce environmental impact by removing the use of fossil fuels in waterways without compromising performance: They estimate that taking one 20 horse-powered four stroke outboard off the water is equivalent to taking 150 cars off the road. Allegro Energy are developing safe, clean and green energy storage solutions via water based electrolytes. Improving energy storage is a key requirement to help decarbonise the world’s energy production infrastructure. This document is intended for the exclusive use of financial advisers using the Booster System. It is not to be used by retail investors and should not be distributed or published without Booster’s prior consent. Booster Investment Management Limited is the manager and issuer of the Booster Investment Scheme, Booster SuperScheme and Booster KiwiSaver Scheme. The Schemes’ Product Disclosure Statements are available at www.booster.co.nz.