Business & Property - Both Looking Strong
The recent volatility in the global share markets that rippled through the business world as the China stock market plunged, and the global volatility prior to that, reminded me of the crash of 1987 and the Global Financial Crisis of 2007. So is there anything different for us here in New Zealand this time? What is the state of our economy? There is some negative comment around!
Dreams unwind
Love's a state of mind
Fleetwood Mac – Rhiannon. Classic video. Huge energy - no lip synching here!
The recent volatility in the global share markets that rippled
through the business world as the China
stock market plunged, and the global
volatility prior to that, reminded me of the crash
of 1987 and the Global
Financial Crisis of 2007. So is there anything different for us here
in New Zealand this time? What is the state of our economy? There is some negative
comment around!
Well first let’s look at a leading indicator of the strength of the economy
here – the residential property market.
Scarcity and Speculation
drive House Prices
The demand for housing is being driven by high migration and
lack of supply, especially in Auckland where
house prices have risen over 20% in the last 12 months. Much of this rise
has been driven by high levels of speculation
which - with new
regulations on speculation and foreign buying due – may well have reached
its peak. The urgency to sell
before the new regulations is borne out by the rush of new spring
listings.
In mid-August Westpac
produced a report on the outlook for residential construction in Auckland. It
addressed the question of how many buildings are needed, and is there the
ability within the construction industry to build them? They came to the
conclusion there is not enough new housing being built to meet existing demand
and to keep up with the city’s population growth. An estimated 10,800 dwellings
are needed – 30% more than current levels.
The REINZ
news release on 18 August - entitled Regions on the Rise - gives a summary
of the state of housing nationwide. The Chief Executive Colleen Milne said “The volume of sales has been
exceptionally strong for the middle of winter right across New Zealand, with
very strong year-on-year sales growth in the top half of the North Island and
Central Otago Lakes in particular.
"Backing this is strong
anecdotal evidence of Aucklanders buying in these regions as owner occupiers
and investment properties. Inventory continues to be a significant problem in
Auckland, with less than 10 weeks supply available, and there is an emerging
problem of available properties in Northland and Waikato/Bay of Plenty, with a
50% fall in inventory for Northland over the past 12 months and a fall of 60%
in Waikato/Bay of Plenty.”
The inference from all the above is we can expect to see a welcome slowing in
the rise in house prices once the new regulations are in place, and a house
price crash of 1987 is unlikely. A recent article in interest.co.nz onBarfoot
& Thompson’s August figures confirms this.
For an excellent “economist’s” view on the above read Rodney Dickens’ June
Ravings “Auckland
House Prices: From Feast to Famine”. His view then was "It is too early to warn about
the end of the latest boom in Auckland House prices, but it is timely to warn
that the boom won't last indefinitely." He notes "there is a large and growing
financial incentive for people to live in the rest of the country rather than
Auckland, while the metrics are moving in favour of investors buying
elsewhere."
His latest September
Raving discusses the continued fall in business confidence in the
ANZ survey "which
suggests the economy is at risk of heading into recession." In
his view the surge in new dwelling consents should have received much more
attention in the media and by bank economists than the highly dubious fall in
business confidence. His view is “Rather
than GDP growth slowing, there is a much better case for expecting it to
improve over the next year. Housing is central to GDP growth cycles.”
Chinese Investment in
Commercial Property
According to the latest report in Unconditional,
the newsletter published by Realestate.co.nz, while the commercial property
market in New Zealand has long been buoyant, a huge boom is expected in the
industry due to lucrative new investment from the Chinese market.
It’s expected because the second phase of the Qualified Domestic Individual
Investor (QDII2) programme implemented by the Chinese Government will come into
effect this month. This removes certain restrictions that were placed on
Chinese citizens and businesses from purchasing and investing in property
overseas.
Not surprisingly the article also says “Not everyone is happy about this
potentially huge influx of Chinese investment”.
Business is Good
Our sister company, Tabak
Business Sales, has been very busy as the demand for good businesses grows.
Buyers are looking for opportunities, business results have been good over the
last couple of years, and all things being equal will continue to be good. And
finance is “cheap”. Anecdotally, at the coal face, there seems to be much more
optimism than some of the surveys may report.
And here at TBK Capital we have never had so many projects on or under review.
When I look at the work we have been approached to raise funds for – whether it
be business or property, equity or debt - the number of projects and total
amount is astounding.
The fact is there is plenty of money seeking better returns than are available from bank deposits, fixed interest and bonds, or without the risks associated with a volatile sharemarket, or the inevitable end to the rapid increase in property values. See my May newsletter - Investment in Productive Assets.
Many sophisticated investors are looking for the same thing; to
purchase an established successful business, or seek a stake in such a
business, which will grow and lead to some liquidity event. The result is there
is more money around than there are investments which meet that criteria. Hence
the large amount of business we are enjoying at both Tabak and TBK Capital.
TBK Investor
Function
On Tuesday the 13th of October, following the school holidays,
we’re holding another Investor Function in Auckland. The last one was in
February and from all reports well received.
This function is a must for private investors interested in private capital
raising offers that are not subject to the Financial Markets Conduct Act 2013
and can therefore participate as “wholesale” investors. Such offers are an
essential part of the capital markets here as a precursor to more public
raisings such as crowdfunding and IPOs.
Seating is limited to 40 people. If you’re interested in attending please reply
to this email. Preference will be given to potential investors who have
requested Information Memorandums describing our offers or who have
participated in previous offers promoted by TBK Capital. Further notice of the
event will be given closer to the time and when the names of the businesses
presenting have been finalised.
Current and Upcoming
Offers
Here’s a list of some of the investment opportunities for which we have been
mandated. Some of these you may have seen before, but because thing keep
changing so fast, we’ll be sending out the revised Offers - and new Offers -
over the next week or so. In the meantime if you’d like to know more, or ensure
you get the Offers, reply to this email or give me a call.
Businesses
Ambrose Group – specialises in the manufacture and supply of packaged foods that cater to the health conscious consumer, CleanPaleo being one. Bank finance arranged, looking for capital to expand internationally.
BizCard – Business to business credit card, backed by established New Zealand finance company and Malaysian software business, which benefits the suppliers to SMEs and SMEs themselves. Offer will give investor/s 43% of the company.
iSEE Digital – Digital indoor screen and outdoor billboard advertising. Potential business expanding so fast our IM is now way out of date. Now looking for bridging convertible note round prior to main capital raise.
Moola – Established online payday loan business seeking expansion capital in the form of shareholding and secured debt.
Pacific Channel Offers – We’ve supported Brent Ogilvie’s projects in the past and now 3 of them, Footfalls & Heartbeats, Engender, and D’Arcy Polychrome, are seeking their next rounds of capital.
Payport - As online shopping continues to boom, shipping goods out to customers efficiently and getting paid remains a challenge. Payport provides an online freight booking aggregator and freight management system, plus an online credit card payment gateway.
RightWay - A new accounting and advisory service provider that is revolutionising the accounting service industry in Australasia. Share issue.
Secure Wealth – The Ashley Madison hacking scare has brought world-wide attention to the dangers of lack of security over the Internet. SecureWealth uses a combination of security technologies that together provide a much more secure user environment than existing online services. This U.S. based business is looking for expansion capital in the form of participating preferred shares.
Skin Alive – Distribution finalised in U.S. New products KidsSkin, FarmersSkin and BuildersSkin launched. Looking for working capital to meet orders and expand international distribution.
Property
We're currently looking at raising equity (and debt) for property developments, subdivisions and the refurbishment of commercial buildings. If this form of property investment is of any interest to you email or give me a call.
On the matter of debt, at TBK Capital a core part of our service is raising loans for property and business. See my newsletter on Choosing the Best Loan and Lender, or for more information on debt finance reply to this newsletter or give me a call.
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The above investments are not offers of financial products that requires disclosure under the Financial Markets Conduct Act 2013 (Act) and are available only to wholesale investors as defined in Schedule 1 of that Act (other than any person who is only a "wholesale investor" under clause 3(3)(b)(i) or (ii) of Schedule 1 of that Act). They are intended for distribution only to selected people to whom, under the relevant laws, they can be lawfully distributed. They cannot be distributed in any other jurisdiction, or to any other people. They are not offers 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.
CheersJP
John Paine B.Sc., Dip BIA
TBK Capital Limited
Level 15, BDO Building
120 Albert Street
Auckland 1010, New Zealand
Phone +64 9 307 3257
Fax +64 9 309 4519
Mobile +64 21 902 901
Email john.paine@tbkcapital.co.nz ⇑ back to top