A FEW big players have dominated the agribusiness investment market in Australia but Rewards Group has defied the odds to carve a successful niche.
Founded four years ago by Andrew Radomiljac and Verona Capital’s Craig Burton, the group now manages 12 agribusiness schemes across six commodities – grapes, mangoes, grapefruit, sandalwood, brushwood and teak.
Dr Radomiljac is keen to differentiate Rewards from the big listed companies such as Timber-corp and Great Southern Plantations, which have based their success on mass-marketed blue gum investment schemes.
“It’s opportunities in agribusiness that we look for that the big players are too big and too slow to pursue,” he said.
Dr Radomiljac emphasises that he and fellow joint managing director Craig Anderson come from agricultural backgrounds.
“We are well aware of what it takes to develop a high quality agribusiness investment product,” he said.
“We have a diverse range of investment products, targeted at the wholesale end, and we fill a niche that the listed players don’t.”
Dr Radomiljac said Rewards raised about 80 per cent of its money in Sydney, with the majority from wholesale, or high net worth, investors.
Rewards’ two vineyard projects illustrate its distinctive approach.
For a start, Dr Radomiljac said he developed the projects only after major wineries started seeking new suppliers of premium sauvignon blanc and chardonnay grapes.
So instead of planting red wine grapes at Margaret River, like many investors who are now struggling, Rewards planted white wine grapes in the Pemberton area.
It has off-take agreements with four major wineries, including Vincorp’s Goundrey Wines.
Dr Radomiljac said Goundrey has guaranteed to buy the grapes for a minimum price of $1,400 a tonne for a period of six years, which would deliver a commendable 13 per cent internal rate of return.
This compares with many other agribusiness investment projects that do not have an assured buyer, let alone an assured price.
Another distinguishing feature of the grapes projects is that the money subscribed by investors simply covers costs and includes no profit margin. Rewards’ potential profit comes from an agreement to take 30 per cent of the grapes at harvest for the next 20 years.
As a result, its interests are aligned with the interests of investors, in contrast to other schemes where the manager takes its profit up-front.
The tropical fruits project is based on the attractions of Kununurra, where Dr Radomiljac lived for six years, as a horticultual region.
He said mangoes grown in Kununurra would mature in September and October, well before other producing regions, and were therefore expected to secure premium prices.
The tropical fruits project also grows new varieties of red flesh grapefruit, which are sweeter than white flesh varieties.
Dr Radomiljac said Rewards had raised a total of $27 million to date and expects to raise a further $15 million to $20 million this year.
It aims to achieve this goal by paying sales commissions in a range of 8 per cent to 10 per cent, which Dr Radomiljac said was at the bottom end of sales commissions paid by managed investment schemes.
- Mark Beyer