An aquaculture managed investment scheme (MIS) manager has become the first to launch an unlisted unit trust product in the sector.
Australian Bight Abalone is planning to raise $15 million through the Australian Aquaculture Fund No. 1.
The manger has run tax-effective MIS schemes in previous years, raising about $25 million last year.
But Government changes to the tax-effective component of horticultural MIS has ruled out offering these types of schemes this year.
Australian Bight Abalone chief executive officer Andrew Ferguson said the new the unit trust was a fundamental shift in the way it offered product.
“In the past, we owned the infrastructure and the investors owned the abalone growing in our cages,” he said.
“Now it is the opposite way around, with the investors owning the infrastructure and we will be growing the abalone on the cages.”
The MIS investor’s abalone that is growing in the South Australian farm will also be included in the new fund as part of the tenancy agreement.
“This is our way of testing the market to see if there is demand for unlisted trusts,” Ferguson said.
“If the demand is there we will launch more that could be in other areas of agriculture.”
Returns for the new fund are forecast at 13 per cent with income distributions every six months.
Ferguson said demand for abalone from Asia showed no signs of slowing despite the economic woes.
The average price for landed whole abalone in Tokyo is 4,500 yen a kilo while in Hong Kong the meat only price is US$120 a kilo, he said.
“The Hong Kong price has been between $60 and 70 a kilo recently and the target in the new fund’s PDS is $45 a kilo.”
The falling Australian dollar is also helping exports of the product and boosting the fund manager’s bottom line.
“The falling dollar has increased our profit margins and we are looking to lock in some currency hedging for future sales,” Ferguson said.
Adviser Edge managing director Shane Kelly said there were a small number of products in the pipeline that were planned to be launched as unlisted trusts.
“We know of one more coming, but most managers are awaiting the outcome of the ATO’s court action on horticulture schemes,” he said.
