29/09/2015 - 11:35

Aboriginal investment fund launched

29/09/2015 - 11:35

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Perth based entities Primary Securities and GCM Advisory have launched Australia’s first Aboriginal investment fund, with an aim to provide 15 per cent returns and promote the growth of Aboriginal and Torres Strait Islander businesses.

GCM Advisory's Tony Connors (left) and Simon Haigh (right) and Primary Securities' Rob Garton Smith. Photo: Attila Csaszar

Perth based entities Primary Securities and GCM Advisory have launched Australia’s first Aboriginal investment fund, with an aim to provide 15 per cent returns and promote the growth of Aboriginal and Torres Strait Islander businesses. 

The national fund is initially seeking to raise $25 million before growing to about $100 million within the next five years, according to Primary Securities.

Aboriginal corporations and trusts (including those with mining royalties) will be tapped for investment first, followed by superannuation funds and eventually retail investors.

Primary Securities managing director Rob Garton Smith told Business News the fund was likely to benefit from the federal government’s new procurement rules – requiring 3 per cent (by number) of all contracts by 2020 be awarded to indigenous business.

The Aboriginal and Torres Strait Islander Business Advancement fund will target a running annual yield of above 5 per cent plus franking credits after its third year, plus potential capital gains.

“(We are) looking at a 15 per cent gain after a few years because if the procurement policy is put into effect there will be growth,” Mr Garton Smith said.

Business News has previously reported the federal government’s indigenous procurement targets, while welcome, have also been met by disappointment from Aboriginal businesses, primarily because they based on number of contracts, rather than value, which has significantly reduced the potential impact of the initiative.

Mr Garton Smith, said plans to set up the fund predated the announcement of the federal government procurement target.

He described the fund, which will operate in addition to Primary Securities’ funds worth a total of about $130 million per year, as a modest start to an appealing initiative.

“We believe investors will be very attracted to this because it’s a different kind of ethical investment...and we know that the public wants these large super funds to be making investments of this nature.”

He said the fund was predicated on a boom in Aboriginal business.

“Quite a number of Aboriginal businesses will require capital for growth and we don’t see ourselves as seeding or starting up businesses, we see ourselves as providing growth capital.”  

GCM Advisory, which regularly advises Aboriginal businesses and those seeking to work with them, will recommend indigenous businesses involved in a range of sectors including tourism, art, science and food, mining, construction and transport to the fund.

GCM Advisory managing director Simon Haigh said the fund would also look to invest in Aboriginal businesses involved in emerging technologies such as digital media and communications.

The board of Primary Securities (made up of chair Ian Murchison and directors Rob Garton Smith and David Butterfield) will consider the proposals and decide which businesses to invest in.

The new fund has been established as a wholesale unit trust, with a minimum investment of $250,000. 

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