Managed investment schemes – financier’s dream or nightmare?

THE sale of tax effective, usually agriculturally-based investments through a managed investment scheme is an expanding and high profile industry.

With 2004 sales exceeding $500 million and expectations of continued growth, this industry provides opportunities for the astute financier both at the promoter-operator level and at the investor level.

The MIS itself usually requires significant banking support from debt finance to transactional services.

With thousands of customers/investors, the MIS also provides fertile grounds for extending a financier’s customer base.

Such opportunities do not come easily.

The risk factors that are unique to funding a MIS must be understood as they are significant.

Because of the MIS structure and the interests granted to investors, a financier’s security position can be substantially undermined in a MIS collapse.

Usual recovery methods are often not available or appropriate.

In those cases, greater thought must be given to the initial security structure and, if necessary, enforcement and recovery.

Phillips Fox, in conjunction with Simon Read of PPB, are going to hold a seminar on issues for lenders and others involved in MISs. Phone 9288 6904 for more information.

Geoff Stevens, partner 9288 6926.