The public finally has access to daily tradeable shares directly invested in dairy farms, albeit in a minimum $20,000 tranche.
Dairy farm shares can for the first time be traded publicly on a new securities platform launched on the unlisted stock exchange, MyFarm Trading.
The shares are direct ownership in one dairy farm, with a minimum $20,000 to $250,000 investment. It is expected there will be an average 25 to 30 shareholders in each ''collective investment vehicle'' (CIV).
Dairy farm manager MyFarm, which holds 47 farm assets totalling $600 million, has launched the unregistered share trading platform MyFarm Trading which sells its farms into a CIV, each of which is a limited liability company and has its own Financial Markets Authority (FMA) approved prospectus and initial public offering.
The public has not had access to direct dairy farm investment, other than trading in Fonterra's shareholder units, which is ultimately exposure to finished products, as opposed to farm-gate milk production.
MyFarm director Andrew Watters has been striving for some time to get a platform under way to attract small investors, which would increase industry access to capital and create liquidity, or share sales, for farm investors.
''Investors and their advisers have been asking for access to our sector, but they've struggled with the long-term nature of the investments,'' Mr Watters said.
The initial public offering, signed off by the FMA yesterday, is for a CIV called GCF Investments Ltd to raise up to $3.52 million - a 40% share in the farm.
The Gold Creek farm being purchased on December 18 is a 214ha, 620-cow property, 17km northeast of Gore. The price is $10.38 million, including about $1.8 million for Fonterra shares.
Mr Watters said: ''On settlement of the farm purchase, shares in GCF investments will be quoted on MyFarm Trading.''
Craigs Investment Partners broker Peter McIntyre said, given MyFarm's scale and base pool of farms, it was in a ''good position to diversify'' and gave the public the opportunity to take part in the economy's largest sector.
He said non-rural investors should not overlook the complexities of dairy farming and should have a long-term and positive outlook on commodity prices.
Asked if MyFarm was selling down its 47 dairy farms into separate CIVs, Mr Watters said it was up to each syndicate to decide on whether it wanted to take up the option of a more liquid investment, using a CIV.
By early 2014, Mr Watters hopes to have a further four CIVs on the MyFarm Trading platform, each an individual farm, including two more from MyFarm's 37 Southland dairy properties.
In mid-August last year Mr Watters successfully launched the separate PRD Investments Ltd, which raised more than the minimum $2 million from 40 to 45 subscribers.
A 181ha Poplar Rd property in Mid Canterbury, including almost 700 cows and Fonterra shares, was bought from a MyFarm syndicate for $13.75 million.
PRD wanted to raise $9.5 million towards the purchase, including the investors' $3.8 million. It trades on the MyFarm Trading platform.
In early 2012, a similar but separate capital-raising concept was announced by Mr Watters and Neil Craig, in Pastoral Dairy Investments, looking to raise $75 million to $100 million in start-up capital. It failed to gain traction and southern analysts were lukewarm on the associated costs, fees and potential yields.
MyFarm has other syndicates operating, at a minimum investment threshold of $250,000. Its average actual subscription is about $500,0000.
