Raising capital while Christchurch rebuild's hot
Francis Fitzgerald is seeking to raise $30 million for his business, which lends to companies wanting to lease or buy equipment - one of the first capital raisings in the city now gearing up for a massive rebuild.
The investment is targeted at sophisticated and wealthy investors willing to invest a minimum of $250,000, and considered in securities law to understand the risks they are taking.
His company, Partners Asset Leasing, projects average returns of 14.15 per cent over five years.
In the past fortnight, investment watchdog the Financial Markets Authority has been in Canterbury talking to the business community about the huge flows of money entering the city from insurance payments.
It advises local people considering investing their insurance payouts to seek advice before committing their money. Fitzgerald said he agrees completely.
Sue Brown, head of primary regulatory operations said: "We don't want to stand in the way of capital raising but we equally do want to make sure it's done in the right way."
Investors needed information to make good-quality investment decisions.
When asked how he could be held accountable by investors, Fitzgerald said under the limited partnership structure he was using for the investment offer, the flow of returns went first to investors. Once that reached a threshold the returns were split between his entity and investors.
"If we don't perform, I don't get anything out of it. The investors absolutely get their money first. So that's how I am accountable. There is also a management contract whereby if we fail to operate, we can absolutely be held accountable."
Fitzgerald said it was the first time he had raised capital from investors.
He is an experienced broker in plant and equipment leasing and sees an opportunity to expand the business and capture higher returns with new shareholders injecting equity. At the moment, the extra returns in his finance-leasing business were being captured by wholesale funders such as the Bank of Queensland, he said.
Lending for plant and equipment leasing was huge in New Zealand but that was not well known by investors. He was aiming to raise $30m by the end of March.
He saw opportunities to lend to the companies repairing Canterbury's underground infrastructure.
"One of the things which has been actually pretty hard for me personally is I have actually deliberately held back targeting a lot of those companies [repairing underground infrastructure] because if I go and target those customers right now, I am effectively going to be giving the business away to the likes of the Bank of Queensland," he said.
He believed his business held significant potential for growth.
"But if I went out to the market saying I want to get $100m in the door, it would be seen to be a little bit overambitious."
He has an information memorandum for investors. The projections were conservative and had been checked by accounting firm Grant Thornton, Fitzgerald said.
"We feel the timing of it now is actually exceptionally good, with a lot of potential investment money out there and some not great returns at the moment from some of the traditional investment opportunities."
Fitzgerald has brought in two independent directors.
One is Bryan Inch, a former chief executive of building society CBS Canterbury, and in senior executive positions with Rabobank in Australia and New Zealand before that.
The other is Ian Robb, the former chairman of Westland Dairy Co-operative.