Borrowing and investing post lockdown
A recent one, as reported in Stuff, says “Here's why things are looking up for the New Zealand economy” which reflects his (and my) opinion that “Our economy is bouncing back, courtesy of good control of the Covid-19 outbreak in New Zealand, high flexibility in our economy, and more”.
May your hands always be busy,
May your feet always be swift,
May you have a strong foundation,
When the winds of changes shift.
Bob Dylan – Forever Young
For many years I’ve been an avid reader of Tony Alexander’s publications. To subscribe to these sign up here.
A recent one, as reported in Stuff, says “Here's why things are looking up for the New Zealand economy” which reflects his (and my) opinion that “Our
economy is bouncing back, courtesy of good control of the Covid-19
outbreak in New Zealand, high flexibility in our economy, and more”.
And in another newsletter on New Zealand’s housing markets,
Tony notes that since 1996, the New Zealand population has grown by 33%
with Auckland by 51%. Even places like Nelson have grown 30%. And
reflecting this growth, in the three months to last August the average
house prices for all New Zealand were ahead 8.8% from a year ago, and
even Nelson was ahead 6.2%.
Yes the housing market still has heat in it. But according to my wife,
who’s been a residential real estate agent in the industry for many
years, and is never wrong about anything, while it’s a seller’s market
buyers are selective.
Finance for property
Houses have always been the easiest source of finance. This is a huge business for the banks. A recent interest.co.nz article by David Hargreaves headlines the “Latest Reserve Bank monthly mortgage figures show over $7.3 bln advanced for mortgages last month”.
However in Tony Alexander’s latest newsletter, his survey amongst
mortgage advisers included the headline “Buyers Frantic, Banks Tough”.
Maybe we’re about to see some changes? Well if there are any, at TBK
Capital we’ve got plenty of other sources.
Probably the most property finance we’ve arranged at TBK Capital is for
residential subdivision and developments. And there have been and still
are plenty of these. Most of the other finance arranged is for
commercial and industrial properties, and for businesses where their
underlying asset - from a lenders point of view - is the land and
building themselves. But see below.
Anyway - if you’re looking for any form of debt finance for property -
don’t forget to call or email me. There are plenty of lenders out there
offering very competitive rates.
Sources of debt and equity for SMEs
I’ve given my view on raising funds for businesses on numerous
occasions, so I was particularly pleased to see Tony Alexander’s comment
that “All up, there is a directional and attitude shift under way
in New Zealand right now which is likely to slowly encourage banks to
ease their newly tight rules for lending to businesses, at the same time
as businesses restart their capital spending plans through 2021”.
It’s clear that obtaining bank finance is not hard if you’ve got a
house, or you own the premises from which you operate. And while over
the years residential prices may have had their ups and downs, this
remains the primary source of finance for owners of SMEs.
For obvious reasons, not the least being banks’ preference for
residential lending, supported by every government’s realisation that
housing policy is a key in getting or remaining in power, owning a house
is the best, cheapest and easiest way to attract finance for SMEs.
Meanwhile I’ve got a number of business clients who have contacted TBK
Capital for the very reason that their banks are not interested in
offering debt finance unless property security is also available. And
yes we do that too.
However a recent survey by Tony Alexander amongst mortgage advisers
raising money for housing has the headline “Buyers Frantic, Banks
Tough”. Combine this with the almost non-existent sources of capital
for expanding businesses and it’s not surprising that we’ve got numerous
request for funds.
Investment opportunities
Of course the other side of the demand for debt or equity finance for
business or property, is the opportunities it provides for people who
are looking for a better return on their money than leaving it in the
bank. And if you’re looking at bank term deposits for a return on your
funds, that is not at all heartening.
But there are some other lenders, including finance companies that do
offer higher rates. There is too large a number of these to list here,
and rates are constantly changing, so if this is of interest call me on
+64 21 902 901 or email me at john.paine@tbkcapital.co.nz.
Over the many years I’ve been in the investment banking business, and as
a reader of my newsletters you will know, there are ways of getting an
excellent return on your money by “investing” in property developments
and subdivisions or in new or expanding businesses here. These
“investments” can take a number of forms including loans or shares or
similar equity instruments.
Many of those of our clients seeking investors you can see on our website. But there are others not there yet, but for whom we’re mandated and in the process of compiling the Offer.
Available now
For example one of our clients is in the business, with stock on hand
ready to sell now, and with buyers for it. This is a spinoff from an
established business and brand in the wine industry. It’s looking for
aggressive expansion by/and/or acquisition of, or merger with, a similar
businesses.
The owners are now looking for the initial working capital round towards
growing it into an international business with an IPO in 3 years’ time.
It’s offering up to 49% of the shares in a new company just formed to
accomplish this. For further information and a copy of their IM reply
this email - and please include your phone number.
In any event I’m always happy to hear from you and if you’d like to
comment on the matters raised in our newsletters. Or of course if you’re
looking to raise debt or equity for business or property, or would like
to invest in either.
The best way to keep in contact is by phone +64 21 902 901, or email me at john.paine@tbkcapital.co.nz
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Any reference above to investment is not an offer of financial
products that requires disclosure under the Financial Markets Conduct
Act 2013 (Act) and is available only to wholesale investors as defined
by that Act. It is intended for distribution only to selected people to
whom, under the relevant laws, it can be lawfully distributed. It cannot
be distributed in any other jurisdiction, or to any other people. It is
not an offer or solicitations in any jurisdiction in which such offers
or solicitations are not authorised, or in which the person making such
offers or solicitations are not qualified to do so, or to any person to
whom it is unlawful to make such offers or solicitations. Any
representation to the contrary would be unlawful. No action has been
taken by any person that would permit a public offering in any
jurisdiction where action for that purpose would be required.
Cheers
John Paine B.Sc., Dip BIA
TBK Capital Limited
Level 10, 120 Albert Street
Auckland 1010, New Zealand
Phone +64 9 307 3257
Mobile +64 21 902 901
Email john.paine@tbkcapital.co.nz