Bendigo Bank boosts regional development
The Bendigo Bank Group, through Sandhurst Trustees Limited, today launched Australia's first Regional Development Fund to attract superannuation back to regional investments across Australia.
The fund, due to officially open on 1 July, was launched in Ballarat by Victorian Treasurer and Minister for Regional Development John Brumby and Bendigo Bank Group Managing Director Rob Hunt.
It will provide a mechanism by which superannuation contributions can be invested in regionally-focussed companies which are profitable and have good growth prospects.
"This fund begins to redress a glaring imbalance in investment in Australia," Mr Hunt said.
"At the moment, regional Australians export enormous amounts of capital through collective investment structures such as superannuation funds which have little or no way to reinvest back into regional areas.
"It is estimated that less than one per cent of the $400 billion held by superannuation funds is invested in regional Australia. Fund managers simply do not have the charter, the local connections, nor the appropriate investment structures, to invest regionally.
"The Bendigo Regional Development Fund will provide fund managers with a sound mechanism through which to invest in solid businesses with good growth prospects."
Mr Hunt said the Bendigo Group acknowledged that this was only the start in reversing the trend and enabling superannuation funds to flow back to regional businesses.
"But if we do just 15 or 20 investments over the next couple of years, that's 15 or 20 businesses that wouldn't have had equity funding otherwise.
"We constantly see excellent businesses with proven track records and established markets but which are constrained because their principals have exhausted their own capital and cannot prudently take on more debt. But if they can access capital, their debt to equity ratio improves and the company becomes stronger and can devote more energy to innovation, product development and marketing, or simply meeting demand."
Mr Hunt said that while governments had an important role in providing regional infrastructure and a supportive investment environment, they should not mandate private regional investment.
"The market is the appropriate mechanism to evaluate the worth of investments and part of our role with this fund is to educate the financial markets about the excellent prospects to be found outside the capital cities.
"I stress that we are not being critical of structures like compulsory superannuation, but you now have a situation where a country city like Swan Hill, for example, exports more than $20 million a year through the seven per cent compulsory employer contribution, Bendigo exports $60 million and Gippsland $180 million.
"To these numbers must be added individual contributions to superannuation and other collective investment structures, so in fact the figures are greater.
"And yet virtually none returns by way of investment in productive activity, despite tremendous innovations emanating from regional firms which do not realise their commercial potential because of a lack of capital support.
"This is not only unfairly restricting regional development, but it is retarding Australia's small business sector - and that is the sector which is the engineroom of innovation and has the greatest potential to grow jobs and wealth in this country."
Mr Hunt said Bendigo Bank's first fund, Regional Development Fund No.1, would be open to wholesale fund managers only, with a longer-term aim of introducing a fund for retail investors.
Regional Development Fund No.1 will be managed through Bendigo subsidiary Sandhurst Trustees, which will also source and evaluate potential investments. Equity investments would be between $500,000 and $5 million in companies targeting strong profit performance and potential growth. Investments in individual companies would be made for three to ten-year periods.
"The Bendigo Group sees itself as having the core skill to source and support such investments for the fund."
Mr Hunt said Bendigo had already introduced the fund concept to a number of fund managers who had expressed interest.
"Our own superannuation fund, Bendigo Investment Plan, is already offering individual retail investors the opportunity to invest a portion of their funds into the Regional Development Fund. Prospectuses are available from Bendigo Bank branches or by phoning 1800 803 173."
The Regional Development Fund complements other regional initiatives with which the Bendigo Bank Group is involved, including Community Bank, the Bendigo Stock Exchange and Community Telco Australia.
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