The highly productive Casterton district cattle property Doyles, has been bought by a group of small investors under a Crowdfunding project

THE crowd-funder which made headlines last year when it tried to mount a bid to buy S.Kidman & Co during the pastoral giant’s torturous path to sale has made its first rural property purchase – albeit on a much more modest scale.

Crowd-funder DomaCom has finalised its first foray into agricultural assets with a ground-breaking deal that gives 90 smaller retail investors a stake in a high performance grazing property in Victoria’s prime Western Districts.

The 150-hectare property, Doyles, just outside Casterton near the South Australian border, is in the undulating heartland of the prime beef and sheep region.

Before entering a contract to purchase the property, the fund was successful in securing a strong local operator to lease the property, to run beef cattle.

DomaCom’s head of property, Jason Bennett said the identification of good operators to work with in the leasing of the property was key to the transaction.

“We are striving to deliver a packaged opportunity to investors to enable them to invest into the rural sector through our platform,” he said.

Although it fell well short of the required stake and was never a serious contender, DomaCom managed to raise $80 million in pledges towards a proposed purchase of S. Kidman & Co last year.

Wikipedia describes crowd-funding as the practice of funding a project or venture by raising monetary contributions from a large number of interested parties. Crowd-funding is a form of crowd-sourcing and of alternative finance. In 2015, it was estimated that worldwide more than US$34 billion was raised this way. Although the concept can also be executed through benefit events or other methods, it is now most often performed via Internet-mediated registries.

In the case of DomaCom’s purchase of the Doyle’s aggregation near Casterton, it said it expected that investors will receive an estimated combined income and capital return of 10pc per annum on their investment, based on historic returns, which is a significant improvement on bank interest.

“More importantly they will have the ability to participate in the strong capital growth currently being experienced in the rural sector,” DomaCom said in a statement.

DomaCom chief executive Arthur Naoumidis

DomaCom chief executive Arthur Naoumidis said the group was enormously proud to sign-off on its first agriculture crowd-funding project, which had taken about two months to bed down.

“It’s our understanding that this is the first crowd-funding project for agriculture assets anywhere in the world,” he said.

“We knew from the Kidman bid that there was a thirst among ‘mum-and-dad’ investors to acquire agriculture assets, and we have been looking at other properties for quite some time.”

“People are motivated by a desire to keep prime rural land in Australian hands, as well as the opportunity for steady yield and capital gain. We have already more investors on our books looking to invest in this asset class, so we are confident that the Doyles deal will be just the first of many,” Mr Naoumidis said.

“There are many rural operators who would love to lease back investor-funded properties to build the agricultural sector. Investors won’t get better security”

Elders’ Hamilton-based property agent David Peardon handled the sale. He said the first successful crowd-funding exercise to allow retail investors to collectively acquire an agriculture asset was an exciting development for the industry.

“I think what DomaCom has done in crowd-funding this property acquisition is fantastic. As a country property agent I have been waiting for 20 years for someone to do this,” he said.

“Thanks to DomaCom for doing this, they will reap the opportunities and rewards as there are many rural operators who would love to lease back investor-funded properties to build the agricultural sector. Investors won’t get better security.”

“In the past, retail investors have effectively been locked-out of buying into rural properties. But as DomaCom’s bid for Kidman demonstrated, where it received around $80 million worth of pledges from 5500 investors, there is an enormous appetite by retail investors for this type of investment.”

The 150ha Doyles property is divided into 11 paddocks of rolling high country fronting Lower Coleraine Road. The holding enjoys outstanding fertiliser history, has excellent fencing and pastures and includes a good set of yards.

The holding was originally offered by expression of interest in December.