Investors who put $6 million into DomaCom’s now abandoned crowdfunding bid for S.Kidman and Company are being urged to re-direct their funds towards a smaller North Queensland pastoral target.
The unconventional investment fundraising outfit wants to spend about $8 million buying into a 120-year-old family beef operation at Charters Towers.
It is also eyeing off the 1900-hectare Victorian Western District sheep and beef “Cheviot Hills” property near Penshurst, to lease the land back to a local farming syndicate.
It sees bullish opportunities in agribusiness for its own investors and for farmers who need capital to upgrade their businesses.
DomaCom’s fractional property investment trust model attracted pledges totalling about $80 million after launching its belated and unconventional tilt at the Kidman pastoral business when Chinese corporate bidders were initially named as likely buyers last year.
Small-scale “mum and dad” investors and a number of farmer partnerships rallied behind DomaCom’s push to have the sale opened up to ordinary Australians who wanted to keep the iconic Kidman name and its beef properties Australian-owned.
However, while 5500 pledges were made, only about 600 potential investors actually opened accounts with funds for the DomaCom bid, with many people holding off to see if a superannuation fund would throw support behind the campaign.
DomaCom’s ambitions were completely short-circuited last week by Hancock Prospecting’s joint venture with Shanghai CRED making a $365 million offer which gained priority bidder status with the Kidman board.
While a minimum deposit in the crowdfunding campaign was $2000, some individual accounts totalled more than $100,000, according to chief executive officer, Arthur Naoumidis.
He said commitments of $10,000 and $20,000 common among supporters who wanted a stake in the Kidman story.
Most that money was still sitting in DomaCom accounts, earning a relatively healthy 2.08 per cent interest rate.
Only about 30 of the Kidman campaign supporters had withdrawn their money.
Mr Naoumidis believed this reflected underlying investor support for DomaCom’s fractional property ownership model and the company’s growing focus on rural property investment.
He said ordinary investors, particularly self managed superannuation fund (SMSF) operators, wanted opportunities to acquire a stake in Australian agribusinesses.
DomaCom, which is itself due to be listed on the Australian Securities Exchange in November, is taking advantage of its Kidman experience and positive sentiment for agriculture among SMSF managers by identifying new smaller scale farming operations where its contributors can own the land.
It intends to leasing the country back to farmers who no longer need to commit vast sums to buying the land they farm.
In particular the company wants to raise about $8 million to buy into a 32,000 hectare Charters Towers district beef property which will continue to be farmed by its current owners David and Jenny Black, who will also have up to 30pc equity in the land.
The aim is to encourage those who put money towards the unfulfilled Kidman venture to divert their investment into this campaign, which is expected to generate about 3pc annual return, plus capital gain.
DomaCom’s platform effectively allows investors to own bite-sized chunks of rural or commercial real estate, rather than having to pay big money to get into the property asset market.
Investors immediately get their share of the rent plus capital gains should the property be sold down the line.
The 4500-head capacity Charters Towers beef operation, “Pajingo” campaign kicks off later this month, with the Blacks proposing to use their payment to expand their already substantial improvements.
They also intend use the cash injection to retire debt, lease extra country nearby and upgrade the operation’s technology and infrastructure.
In Victoria the potential tenant for the $12 million investment target is the Western District Cattle Company (WDC) a producer syndicate whose members have livestock operations locally, in South Australia and King Island.
Mr Naoumidis said DomaCom had a shortlist of about six rural properties it was looking at buying into, and plenty of landholders queuing up seek investment interest in their farms.
“There are many landholders eager to expand their businesses, but they’re restricted by not having enough spare capital, or they’re already locked into paying big mortgages,” he said.
“We have investors who like the idea of being involved in agribusiness and helping real farmers free up their capital commitment to spend on expansion.
“Our Kidman bid demonstrated enormous appetite among investors to acquire agricultural assets.
“People are motivated by a desire to keep prime rural land in Australian hands, as well as the opportunity for steady yield and capital gain.”
Mr Naoumidis said the Kidman crowdfunding campaign which had generated a “staggering public response”.
Although an ambitious exercise for his novel investment company which previously focused on city property, it stirred public debate about the sale, resulting in majority ownership of Kidman and Co remaining in Australian hands.
“We’ll use that momentum to further address funding issues for Australian farmers at a more grassroots level, focusing our energies on more attainable rural opportunities with significant structural benefits,” he said.
“We’d like to see Australian farmers stay on the land with minimum of debt, rather than their properties selling to overseas interests.”