Absolute Capital launches PINs product in NZ
Media Release: 7th December 2005
Absolute Capital launches PINs product in New Zealand
- Offering NZ retail investors a “rear-ended” fee structure.
- Capital protected income product offered to NZ investors.
Absolute Capital Group Limited (Absolute Capital), a leading specialist boutique structured credit manager, and promoter of the Packaged Income Notes (PINs), has launched an innovative offer in New Zealand which is designed to generate a high 9.25%pa1 return with the benefit of 100% capital protection provided by ABN AMRO Bank N.V.
- Limitation of risk provided by ABN AMRO’s capital protection2 to the Issuer (PINs Securities NZ Limited) for investors’ capital at the conclusion of the seven year product term
- Designed to generate 9.25% per annum1 yield
- Potential bonus interest payment at maturity of up to 18% - creating highly competitive total potential returns of 10.95%1 per annum over the life of the PINs (seven years)
- Regular coupon generating quarterly income to investors
- Rear-ended performance fee structure offered to retail investors in New Zealand, generating considerable alignment of investor and manager interests
- Product income in the Credit Investment Portfolio is supported by a range of internationally diversified credit and other investments
- NZDX3 listing creates the flexibility of secondary trading within the seven year investment term.
The product’s returns will be generated by exposure to a diverse Credit Investment Portfolio that will be managed by Absolute Capital Limited. The initial Credit Investment Portfolio is expected to invest in 20 specialist credit managers who, in turn, invest in a range of countries and industries with a number of strategies that include income, short selling and value. This is designed to generate a highly competitive 9.25%pa1 and a potential final interest payment to investors up to a maximum of 18% of the principal amount of PINs. This equates to a potential return of 10.95%pa1 at the end of the seven year term if investors hold their investment until maturity. This compares favourably with many other structured investments that don’t offer the stability of capital protection or the attraction of regular quarterly income.
The rear-ended performance fee structure offered by Absolute Capital for this PINs product is available to New Zealand retail investors (it is usually only offered to institutions). It means that Absolute Capital Limited, as investment manager, will only earn a performance fee when performance exceeds, amongst other things, the payment to investors of the targeted 9.25%pa1.
The product is expected to list on the NZDX, enabling investors the flexibility to trade out through a secondary market should they wish to access their investment earlier than the seven year life span of the product.
The offer opened on 28th November and closes on Friday 16 December. The minimum investment is $5,000.
Commenting on the launch, Deon Joubert, Absolute Capital’s Managing Director, said, “This product has been developed to reflect the feedback we have been receiving during our four year involvement with New Zealand’s investors. So we are very pleased to offer a product that provides a combination of diversified risk and capital protection2, high performance and the flexibility to exit the investment through a secondary market."
With 100% capital protection2 on the initial commitment provided by ABN AMRO Bank N.V. to the Issuer and competitive returns generated from highly diverse international investments, Joubert believes that this investment product is well-suited for the less certain market conditions that we are experiencing.
“We are also very pleased to offer New Zealand’s retail investors the type of rear-ended performance fee structure that, until now, has generally only been offered to institutions.
We hope that by only taking a performance fee when this product exceeds its targets in seven years time, we are demonstrating our confidence in this product, our alignment of interest with the investors and our continuing long term commitment to New Zealand’s investors,” Joubert added.
About Absolute Capital Established in 2001, Absolute Capital offers focused boutique capability.
Absolute Capital is 50 per cent owned by ABN AMRO Australia Limited, a wholly owned subsidiary of ABN AMRO Bank N.V. The balance of Absolute Capital is owned by Absolute Capital Management Holdings Pty Limited, representing the interests of staff and management.
Absolute Capital Limited, as part of the Absolute Capital Group, is a specialist boutique structured credit manager, offering a range of structured credit and fixed income products to the Australian and New Zealand markets.
Absolute Capital Limited uses non-traditional investment techniques to meet the increasing demand of yield-driven products to create absolute returns. Capital preservation can be achieved with risk being limited to an acceptable level sufficient for the generation of investment returns.
1 Payment of interest on PINs is subject to investment risk (please refer to the combined Investment Statement and Prospectus).
2 There are limited circumstances in which capital protection may not apply (please refer to the combined Investment Statement and Prospectus).
3 Application has been made to NZX for permission to list PINs, and all the requirements of NZX relating thereto that can be complied with on or before the date of this release have been duly complied with. However, NZX accepts no responsibility for any statement in this release.