An Australian property investment platform is attempting to fill the funding gap for Australian farmers with its expansion into the agricultural market. By offering the opportunity for retail investors to acquire stakes in farms listed on its platform, DomaCom hopes to provide farmers with an alternative to bank finance.
Estimates at Agri Investor’s recent Australia Forum put the Australian agriculture funding gap at between A$400 billion and A$500 billion, and many smaller farming businesses complained about the inability to attract private equity capital below the A$20 million threshold for many institutional investors.
DomaCom, founded by banking technology veteran Arthur Naoumidis in 2011, has recently started offering agricultural real estate under its fractional investment model; until now it has focused on other types of real estate. The firm targets investment from self-managed superannuation funds (SMSFs), officials told Agri Investor, by listing stakes in properties on its platform for as little as A$20,000, according to Warren Gibson, general manager.
“And that [A$20,000] can be spread across as many as 10 different properties,” he told Agri Investor. “The effect is the same as spreading your money across multiple companies to achieve a diversified portfolio. DomaCom offers an asset allocation solution to the property market which, in Australia, is very expensive.”
The funding route also aims to enable farmers to raise capital without having to use traditionally limiting bank finance channels. “Instead of paying the higher mortgage rate, they pay the investors a rental yield, which is generally lower,” said Gibson. “The farmer can save a considerable amount in this way.”
DomaCom is also aiming to provide investors with liquidity for their units through an online secondaries market. This secondaries market could be an opportunity for a farmer to increase his stake in the farm over time, said Gibson. “Each property is revalued annually so investors have a good idea of the capital value of their units,” he said.
DomaCom requires investors to invest a minimum $20,000, which can be divided into separate investment lots of as small as $2,000 each into different properties, Agri Investor learned. DomaCom will acquire the property once there is enough investor interest. Gibson likened the fundraising process to that of an online bookbuild during an initial public offering.
The DomaCom Fund is a property investment vehicle with a Managed Investment Scheme tax structure offering 20,000 properties across Australian residential, commercial, retail, leisure, industrial and rural properties. There is only one agricultural asset on the platform so far.
Additional reporting by Louisa Burwood-Taylor
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