THE past 12 months have been an unsettling time for truffle project manager Oak Valley Gourmet.
While the economic slowdown has affected the broader investment outlook, Oak Valley, like other non-forestry managed investment scheme operators, was forced to wait on the outcome of the well-publicised Australian Tax Office test case.
In the face of the regulatory uncertainty, Oak Valley Gourmet forged ahead with its capital raising plans. But this year, for the first time, the offer will be open to self-managed super funds as well as MIS investors.
Managing director Geoff Barrett said the strategy was in line with its original business plan, established in 2006.
With 55.2 per cent of 374 units already sunk into MIS, the balance of 44 .8 per cent will be made available to self-managed super funds.
"We formed this view before the economic crisis, which only reinforced the view that the particular structure that we offer is more suited to self-managed super funds," Mr Barrett told WA Business News.
"It's the combination of capital growth from ownership of the land and income generated by the truffle business that makes it suitable for that type of investment."
Mr Barrett said the business model enabled Oak Valley Gourmet to raise all of the capital at once, so investors were not required to pay further management fees.
"With truffles there is a five year no-income period, so people are paying management fees for five years without seeing any form of income," he said.
"We are in a strong enough position that we can offer the balance of the property as a self-managed super fund."
Oak Valley Gourmet operates in tandem with Watershed Premium Wines, which is responsible for its own vineyard project as well as the Oak Valley Truffle Business Project.
Like other non-forestry product providers, Watershed and Oak Valley suffered in last year's climate of uncertainty.
"Last year it was very difficult to raise funds. We had an offer for Oak Valley and we found it very difficult to convince potential investors and even financial advisers that the prospects of the ATO were negligible," Mr Barrett said.
Investors and financial advisers were concerned that, if the ATO succeeded in the litigation, it would seek to retrospectively apply the legislation to all those involved in managed investment schemes.
"There was sufficient uncertainty to ensure a number of people were deterred from investing, particularly in truffles," Mr Barrett said.
The Oak Valley truffle lot is situated in the same valley and about three kilometres west of established truffiere Hazel Hill, along Seven Day Road in Manjimup.
Oak Valley Gourmet Pty Ltd has an agreement with Hazel Hill Pty Ltd allowing the complete and open transfer of information and knowledge concerning the commercialisation of truffle production.
Hazel Hill produced about 600 kilograms of truffle in 2008, an almost exponential growth from its first harvest in 2003, which yielded just one truffle, the first for Manjimup.
It is envisaged that the company will eventually merge with Hazel Hill, which is now in its 10th year.
The first truffle crop at Oak Valley is only three years old, with a further two years before it reaches maturity.
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