Ringfence offers unique package

Ringfence Capital Fund offers investors exposure to several attractive sectors in the same investment: retail property and supermarkets in the fastest growing regions of Australia.

The Perth-based fund is seeking around $20 million from investors in its first tranche, which is to acquire three regional IGA supermarkets in WA and centralise their back office management and administration and boost buying power

“We’ve had experience in running this model over the last two years in WA through several earlier deals with supermarkets, and we’ve seen the efficiencies and savings the model brings,” explains Ringfence director Rod Hamersley.

“We’ve been providing a back of house role for several supermarkets and it’s a much more efficient model for management, because the store owners are often not as well equipped as we are for that role and importantly it allows store managers to focus on what they do best – running the retail floor and being the local face for the business.

“So now we see the benefits in expanding that model and offering it to investors in the structure of an unlisted wholesale unit trust.”

Ringfence is initially focused on regional supermarkets in WA and also in Queensland, but will also look at metropolitan sites as the fund develops.

“We have targeted regional in the first instance to avoid competition from the major players in the market – often in regional towns you are the only option for consumers to purchase staple products like groceries,” says Hamersley, who is part of a management group that has deep experience in the supermarket and property industries

Of particular note is the involvement of Rod McPhee who has held previous roles as Director of Action Holdings and General Manager of Action Supermarkets, which under his leadership grew revenues from $130 million to $1.3 billion before being acquired by Metcash.

“As we continue to acquire assets and therefore increase the size of the fund, we expect a number of economies of scale to have a positive impact on investor returns,” says Hamersley.

“These will occur as our buying power increases and we take advantage of investment buying opportunities and gain efficiencies in freight and distribution.”

Ringfence is setting a benchmark cash distribution of 15 percent per annum to investors paid quarterly, but that does not include any potential capital growth.

The fund is conservatively geared with a total debt at 44 percent LVR, and unlike other similar funds Ringfence plans to pay down principal over the course of the investment.

The investment terms are just under five years, closing in June 2017 at which point investors will vote to either continue or exit the fund. Exit plans include a trade buy-out, a private equity investment or a public listing, all of which have precedents in the market.

To learn more about Ringfence Capital Fund please Click here.