SA’s $500m Waterfind water fund: seeks investors with at least $250,000

SA Waterfind brokers are trying to raise funds to buy water rights, as the Federal Government seeks an extra 450GL for the MD Basin.

Precious resource: Darling River flows finally reach Lake Menindee last year, aftre years of drought, highlighting the value of Murray Darling Basin Water.

South Australia’s Waterfind brokers are seeking investors with at least $250,000 to spend on a new unlisted unit trust called the Waterfund, which aims to secure $500m of water rights over the next five years.

The move comes in the wake of the Federal Labor government’s promise to deliver an extra 450 gigalitres of environmental water to the Murray Darling, over and above the 2750GL already promised.

Documents seen by The Weekly Times show Waterfind chief executive Tom Rooney expects to deliver investors a net return of between 9.5 per cent and 11.5 per cent (after fees, other than performance fees, and before tax), with an annual cash distribution yield of between 1 per cent and 4 per cent.

The information memorandum also states that on the issue date of units in the fund “an entity associated with the Manager (which is currently within the broader Waterfind

corporate group) intends to invest an amount up to $250,000 in the Fund”.

The Weekly Times asked Mr Rooney if Waterfind would notify his brokerage clients when buying or selling water on behalf of the Waterfund, given his company manages the fund.

Mr Rooney is yet to respond, but the fund’s information memorandum simply states it “will acquire water rights via trades and tenders offered on the open market, and will utilise Waterfind’s knowledge and network to identify, develop, or originate water investment opportunities across Australia.”

As is standard for investment trusts Mr Rooney and his Waterfind team will earn a range of commissions and establishment fees on the fund.

Those fees include:

10 PER CENT of the outperformance of the fund above an internal rate of return of 7.5 per annum.

1.5 PER CENT of the consolidated gross asset value of the fund and the sub-fund

In a brochure promoting the fund Mr Rooney states “the Waterfind Waterfund is an opportunity to invest in Australian Permanent Water Rights… (that) underpin the Australian economy and environment while providing strong investor returns through our deep management strategy”.

The brochure also states that “for the past 10 years, water rights have provided an average return of 11.9 per cent per annum” and highlights that “the Commonwealth Government is an active buyer of water assets in the Australian water market pursuant to a water acquisition program developed under The Murray-Darling Basin Plan that is designed to improve environmental water flows”.

The fund’s information memorandum states its goal is to buy and hold water rights, and to generate an annual income through long-term water leases and water allocations.

Waterfind is not the first brokerage firm to get involved in a water fund.

Last December The Weekly Times reported Wagga Wagga water broker Tom Wilks joined a team of local and US partners to form the Aqua Ceres Australia Water Fund, which is urging investors to gamble $193 million on climate change and horticultural demand driving up Murray Darling Basin water entitlement prices by 53 per cent within six years to be worth $295m.

The Delaware Incorporated fund’s investment team includes Mr Wilks, Australian Wealthcheck director Sam Mitchell and US executive officer Rod Parsley, who have set up what they refer to as a “Cayman mini master structure”, which allows both “non US and US tax exempt investors” to direct their funds through a Cayman Islands feeder fund.