CLUBHOUSE | LIQUID ASSETS
BUYING A VINEYARD AS A SYNDICATE SHARING THE COST OF VINEYARD OWNERSHIP CAN BE AN ALLURING OPTION FOR INVESTORS, SAY VIRTUOSO PROPERTY GROUP.
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wning a leg of a horse or the s ail of a y acht is a concept f amiliar to many. Joint ownership, professional out source d management, sharing the cost and prizes and taking turns to enjoy the race or sailing in seas with a group of friends has both social and economic benefits.
“The key is to define the objectives, set out the framework clearly and select the management team carefully. This is easier said than done, especially if the owners are only there for a few weeks in a year,” adds Richard. "Our clients love the fact that the hassle of managing the business can be outsourced to an experienced and professional team, something we provide as our overall business management solution."
The same concept when transposed to vineyards is equally alluring, if not more so. According to vineyard acquisition and management exper ts Vir tuoso Proper t y Group, the trend is catching up fast in the viticultural world. “Think of this as owning shares in a business – producing and selling wines, and enjoying corporate perks – the Château lifestyle and producing private label wines,” says Richard Sutton, Virtuoso’s cofounder. “We are now regularly approached by groups of investors who want to embark on the journey of learning about the terroir and making their own wine. They like to have fun doing so, but do not want to get dragged into the nitty-gritty of how many temporary staff are needed for this year’s harvest and how to employ them."
HOW WOULD A TYPICAL SYNDICATE WORK?
Joint ownership, sometimes referred to as Syndicate struc ture, can be tailored to the needs of the parties involved. At one extreme is a “fund structure”, which provides degrees of separation between investors and management and is typically more focused on driving the returns as high as possible. At the other end is a friendly arrangement where investors get involved in the vineyard management and winemaking decisions on a regular basis, thus enhancing learning opportunities and social pleasure. The permutations in between are endless.
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Let’s use one of the Syndicate projects we recently launched as a case study. A St Emilion Grand Cru vineyard - situated just 3km from St Emilion town centre, was identified for acquisition in November. It is next door to a famous Grand Cru Classé vineyard and shares similar terroir as its neighbour. The purpose of the acquisition is to enhance the quality of the existing wines thereby achieving higher prices and margins and potentially elevate the classification of the vineyard to Grand Cru Classé. To achieve this, the founders assembled a quality and worldrenowned management team, including Louis Mitjavile (Château Tertre Rôteboeuf) and worldrenowned critic, judge and writer Steven Spurrier. The next step is to bring in a Syndicate of ten investors to fund the acquisition.
WHAT ARE THE BENEFITS FOR SYNDICATE MEMBERS?
• Outright ownership: Syndicate members are the owners of the vineyard and the business. The investment is in underlying physical assets – bricks and mortar. •
No day-to-day hassle of business management: With the support from the founding members, including Virtuoso, the Syndicate appoints a management team, which in turn runs the business as per an agreed business plan – from vineyard management, to wine production, staff management and marketing and sale of wines.
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Customise the Château to own taste: In this instance, the interior of the Château is refurbished to the Syndicate members’ high standards including putting in modern facilities – swimming pool, tasting room etc. The entire upgrade will be outsourced to the management team for professional execution. It is budgeted upfront.
• Wine allocation: Allocation on a priority basis of the own label wines. • Exclusive use of facilities and perks: Exclusive access to facilities such as Château, annual wine dinners, wine courses, full concierge service and circle of friends concepts. • Structural benefits: This particular Syndicate entails upfront investment and no annual cost or maintenance charges. Additional investment incentives such as tax relief for certain jurisdictions.
WHAT TO LOOK FOR IN A SYNDICATE • Selection of vineyard: Terroir, vines and quality of wines.
• Sound business plan: Production, marketing and sale of wines. • Founders’ and Management team’s motivation and alignment of incentives with the Syndicate members’ objectives. • Compatibility with other members and management team. • Appreciation of risks in the business which is essentially an agricultural business: climate, hail, frost. • Price volatility of vineyard and wines. • liquid nature of the investment, unless the founders provide a mechanism for secondary liquidity.
INTERESTED TO LEARN MORE ABOUT SYNDICATE OPTIONS? With our specialised on-the-ground teams and price range from as little as €0.5m to €10m per Syndicate share, we are best placed to share the structuring, availability and variety of Syndicate options available across European vineyard markets. Reach out to us on info@virtuoso-propertygroup.com for more details. For further information on vineyard investments visit virtuoso-propertygroup.com
HKGOLFER.COM
HKGOLFER.COM
HK GOLFER・JAN 2015
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