December 5, 2019

Merricks Capital Launches in New Zealand with NZ$140m Agriculture Finance Deal


Merricks Capital, an Australian-based funds manager and property financier has completed a $NZ140 million refinance of the Van Leeuwen Group dairy operation, signaling its launch into the New Zealand market.

With a global institutional client base that includes pension funds, fund-of-fund and family offices, Merricks Capitals’ investment and lending platform provide clients with access to a range of unique services including structured credit and investment vehicles in commodities, equities and fixed income.

For investors, Merricks Capital offers a wholesale fund called the ‘Partners Fund’ which has now been expanded to include a New Zealand dollar class allowing investments directly in NZD, USD and AUD. The fund is returning around 13% per annum.
The New Zealand lending market is undergoing a fundamental shift, which presents opportunities for both borrowers and investors as large, incumbent banks are forced out of the market, according to Adrian Redlich, CEO, Merricks Capital.
“The banks continue to struggle to balance the cyclical patterns of agriculture with their own asset and income-based lending criteria but it’s the Reserve Bank of New Zealand’s proposal to raise banks’ capital ratio to 16% which will be most damaging for the agriculture industry, with traditional borrowing costs expected to increase.

“The Reserve Bank of New Zealand continues to advise banks to tighten credit rules which is reducing the access to capital for borrowers across all industries, with the farming sector one of the most affected,” Mr Redlich says.
Andrew Torrington, COO, Merricks Capital says that the company’s entry into New Zealand presents an opportunity for New Zealand businesses.

“In an agricultural industry that is starved of capital, we provide a flexible, agile, alternative lending option for customers in New Zealand. We are here to fill the void left by banks to ensure that the New Zealand market has access to the capital it needs to thrive.
“We’re entering the New Zealand market at an opportune time, with an offering that will ensure that New Zealand agribusinesses are primed to leverage commodity demand,” Mr Torrington says.

Global demand for dairy continues to grow. The OECD forecasts that global demand for fresh and processed dairy products will grow by 2.1% and 1.7% respectively between 2017 and 2019.

With a business comprising over 7,500 hectares of land in New Zealand’s South Island, Van Leeuwen Group currently milks over 10,000 cows across 11 dairy farms. The business produces approximately 5 million kgs of milk solids per annum.
With restructured finance, the Group has the financial stability to continue its focus on revolutionary farming solutions, such as its robotic farming system. This innovative production method ensures that calving, breeding and drying off cows can take place throughout the entire year. The technique will ensure Van Leeuwen Group is well positioned to ride the global demand for dairy.
Beyond agriculture, Merricks Capital also has deep expertise in commercial real estate and infrastructure projects and will be providing its full range of financial services in New Zealand across each of these sectors.

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