This week’s collapse of Melbourne-based Willmott Forests is third major failure of a managed investment scheme player this year and lands a significant blow to the once multi-billion dollar sector with strong Western Australian roots.
This week’s collapse of Melbourne-based Willmott Forests is third major failure of a managed investment scheme player this year and lands a significant blow to the once multi-billion dollar sector with strong Western Australian roots.
Willmott went into receivership on Monday after struggling to come to terms with poor MIS sales for the year ending June 30. It follows the demise of several other MIS operators including giants Timbercorp and Great Southern last year, as well as the collapses of Forest Enterprises, Rewards Group and its associated entity ARK Fund this year.
That leaves thin pickings among the survivors.
One notable exception is TFS Corporation, which has neatly side-stepped the MIS debacle by shifting its reliance on retail funding to a wholesale funding methodology.
Last week TFS reported a more than 24 per cent increase in operating revenues to $97.4 million despite a 37 per cent fall in MIS revenue, which now represents just 27 per cent of turnover.
This result comes not just at a time of difficulty for the MIS sector but also during generally tough economic conditions that has affected fund raising across a range of sectors.
“The business model has been successfully transitioned away from solely MIS, and evolved into one with a diverse mix of plantation and processing related sales,” TFS executive chairman Frank Wilson said in a statement released the ASX.
Mr Wilson said wholesale investors from offshore provided a significant change in the revenue profile for TFS, as well as a good performance from the Mount Romance sandalwood oil business.
But the wholesale markets were not a simple solution for everyone.
Share farmer AACL had a torrid time in the financial markets seeking institutional funding to supplement retail investment, which it said amounted to $24 million.
AACL listed in April, after a delay of some weeks, and was beset soon after by issues surrounding its institutional funding arrangements with farmer cooperative CBH Group which had provided a similar facility the previous year.
AACL managing director Andrew McBain stood down in mid June and a new wholesale funding arrangement of up to $28.8 million was struck with Glencore, which includes partnering with the Swiss giant’s grain marketing operations. AACL founder Mike Shields stepped down as a director on July 6.
Meanwhile, things remain complex at Rewards and ARK. Administrators from two different insolvency firms were appointed in June to the companies within each group and the partners of a third firm have been appointed as receivers and managers over certain assets of both groups.
A Rewards Growers Advocacy Group has also been formed to represent investors in the schemes, with several financial planners sitting on the board of that organisation.
