Invest in the Business of Providing Retirement Income - FULLY SUBSCRIBED AND NOW CLOSED
After only 8 years, KiwiSaver - New Zealand’s semi-compulsory national retirement savings scheme - has been hugely successful with over 2 million members. Over the next 15 years over half a million people will be eligible to leave the scheme with accumulated savings of $36 billion.
After only 8 years, KiwiSaver - New Zealand’s semi-compulsory national retirement savings scheme - has been hugely successful with over 2 million members. Over the next 15 years over half a million people will be eligible to leave the scheme with accumulated savings of $36 billion.
Now a new company, Retirement Income Group Limited (RIGL), has been formed to provide a way in which anyone, on reaching 65, can make an investment into a modern capital drawdown product that will give them a tax paid guaranteed annual income for life. See recent New Zealand Herald article.
Lifetime Income Fund
Retirement Income Group’s product is the Lifetime Income Fund, solves the problem many retirees have of the limited number of options available to convert their savings into regular income outside low interest bank deposits. Products such as this have been long established in the U.S., Europe and Japan.
RIGL is the result of 3 years of negotiations with Government, the Reserve Bank, and the IRD. Their product allows retirees to:
- Retain ownership of their savings.
- Receive guaranteed minimum 5% tax paid income for life.
- Withdraw residual capital at any time.
- Pay any residual capital to their estate upon death.
The funds guaranteed annual income rates are set when the participant commences their income payments. In other words the Lifetime Income Fund is a capital fund - like Kiwisaver – but in which the participant can turn part or all into income whenever they chose.
For example, someone joining the fund at age 65, who wants income from that date, would receive 5.0% after tax each year for the rest of their life. Or they may join the fund - at any time from age 65 to 84 - and request to receive their income payments at 85, and their minimum income for life would then be 7.0% tax paid. A sliding scale of income returns exist in between these ages.
Marketing the Lifetime Income Fund
Retail market. The company has established a website that already has had over 400 registered Authorised Financial Advisers(AFAs) expressing interest in selling the new product. A large number of AFAs have also applied for shares in Retirement Income Group Limited. Initially the company’s primary distribution channel will be through these registered product distributors. GoodReturns, an industry website aimed at Financial Planners, has featured the business in a number of articles on the new business (some under the development company’s original name NZIG). Already over 35% of AFAs selling retirement savings products in New Zealand are registered users.
Wholesale market. Two of New Zealand’s largest trading banks are completing due diligence on Retirement Income Group to support marketing the scheme through their branches.
Workplace superannuation market. In addition to the above markets, the introduction of KiwiSaver has removed the need for employers to provide workplace based retirement savings schemes that provide pensions. New Zealand has 95 of these types of schemes today with a combined value of $9 billion. The RIGL product is one of the few options available to employers on exiting their old schemes.
Capital Raising
The Retirement Income Group Limited is now seeking capital to launch the Lifetime Income Fund in the third quarter of 2015. The Information Memorandum describing the Offer is available now.
A minimum of $4.25 million is being raised through the issue of ordinary shares, $2.0 million from the founding shareholders in RIG and $2.5 million from new investors. The directors are offering 29% of the Company for the $2.5 million. The capital will be used to fund Regulatory Capital requirements ($2.25 million) and $2.0 million of working capital. See Good Returns article here.
Of the remaining $2.25 million sought already near 80% has been committed . Oversubscriptions up to $3.0 million will be accepted, but all applications must be received by the closing date of 22 of May.
In 2017 RIGL intends to undertake its first institutional capital raising of $3.0 million.
Financial Projections for Retirement Income Group Limited
RIGL’s revenue is derived from brokerage on the management fees charged to the fund, and from brokerage on insurance premiums to the company by investors for the guarantee. Commencing in 2015 RIGL’s forecast revenue growth in the next 7 calendar years from each source of business is as follows.
1. From the Retail (AFA) market $8 million.
2. From the Wholesale (KiwiSaver provider) market $4 million.
3. From converted Workplace superannuation schemes $4 million.
That’s a total revenue of $16 million within 7 years. Retirement Income Group Limited is forecast to be in profit from the Retail source alone in the year ending December 2017.
Following the institutional raising planned for 2017, the financial projections in the IM show RIGL would have EBITs in 5 years of;
- $1.5 million from sales from the Retail sector alone,
- $2.8 million from the Retail and Wholesale sectors, and
- $4.2 million from the Retail, Wholesale and Workplace sectors.
Investing
An Information Memorandum is available now. If you'd like a copy reply to this email or give me a call. This will include all the documents required to be completed to invest.
Applications must be received by 22nd May 2015. See our website for the requirements to invest in RIGL.
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The above 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
JP
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
For more information, please click the contact button below to send us a message.
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