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Fedgroup’s app-based impact investing platform helps...

DM168

INVESTMENT WATCH

Fedgroup’s app-based impact investing platform helps farmers to see the green shoots

A hydroponic vegetable greenhouse. (Photo: iStock)

Fedgroup’s impact investing platform, launched on the Fedgroup app just three years ago, has had inflows of R145-million from 14,300 retail investors to date, with the company deploying R300-million in investments into solar panels and R100-million in agricultural assets.

Fedgroup’s chief executive Grant Field says the app currently offers six assets — blueberry bushes, moringa trees, macadamia trees, beehives, solar panels and lettuce stacks that grow hydropronic lettuce. The medium- to long-term investments carry different maturity periods, ranging from seven years for lettuce stacks to 20 years for solar panels.

The investment carries zero fees for investors and Fedgroup earns money from the fees on the borrowing side — in other words, from the farmers.

“The idea is to have an impact on farming in general and offer farmers an alternative way to raise capital while offering investors an alternative investment,” says Field.

“We are not restricting the offering to smaller farmers. For example, we currently have 350,000 blueberry bushes on a single farm in Tzaneen, where we are busy deploying another 200,000 bushes and our part is only a fraction of the farmer’s overall operations. The beekeepers, however, tend to be smaller operators,” he says.

If you invest in lettuce stacks, you are not just buying lettuce but investing in a 6m hydroponic stack that produces an increasing return with each harvest cycle.

Field says often lenders pass potential borrowers through one model of credit solutions, and they don’t really understand the asset, whereas Fedgroup takes a much deeper view, looking at the economics around a certain type of agriculture but also taking into account factors such as the acidity of the soil, cover crops, pollination and weather patterns.

Average projected returns per year are fairly competitive, ahead of inflation by a significant margin and ranging from an average 10% a year to an average 14% a year over the lifetime of the investment.

The lowest initial investment is R500; however, once you are an investor, you can buy into other assets for as little as R100. Fedgroup collects your money and pays it over, for example, to the macadamia tree farmer.

Payments back to you could be monthly, quarterly or biannual and you can choose either to reinvest your earnings or disinvest into your bank account.

Field says new assets will come on to the platform in about six to 10 weeks, although he declines to reveal what they might be. The platform is currently running a special offer on investments in macadamia trees.

“Our partners are offering an extra return if they can raise cash quickly. Where you would normally buy a macadamia tree for R3,000, you can now buy 10 for R25,000 or a R5,000 discount. We estimate a 15% return per year on your macadamia tree over the eight-year investment period,” he says.

South Africa is the largest macadamia nut producer in the world and the local macadamia industry is worth about R4-billion.

Fedgroup faces competition in this particular area from Livestock Wealth, another app-based investment platform offering the same type of impact investing. If you invest R2,000 in macadamia trees on the Livestock Wealth app, the site promises a minimum profit of R1,948 and a maximum profit of R2,164 after six years. The maximum projected income over six years is R4,164 or more than double your initial investment.

The macadamia trees and blueberry bushes do not belong to you at the end of the investment period. You also don’t necessarily have to wait for returns.

With macadamias, for example, Fedgroup’s partner has trees already six years old, so you participate from the first harvest. Similarly, by the time solar panels are brought to market, six months of work has been done behind the scenes, so the panels can go online shortly after you invest. DM168

This story first appeared in our weekly Daily Maverick 168 newspaper which is available for R25 at Pick n Pay, Exclusive Books and airport bookstores. For your nearest stockist, please click here.

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