What is a “wholesale investor”?

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March 14, 2017/Alan Henderson

Because our commercial property syndicate or fund offer has some unique features, to subscribe to the offer you will need to qualify as a “wholesale investor”.

Wholesale investor is a term used in the Financial Markets Conduct Act 2013, to describe a person (or business) with a good understanding of different investment vehicles and how they work.

Wholesale investors are defined in law and, broadly speaking, are people or organisations who have sufficient previous investing experience that means they don’t require disclosure.

You can either be a wholesale investor for all offers of financial products, or just for a particular offer.

Wholesale investors for all offers of financial products

An investor is a wholesale investor for all offers of financial products if:

  • they are an investment business (for example, an entity whose main business is investing in financial products, a registered bank, or a financial adviser);
  • they meet the investment activity criteria specified in law to essentially qualify as a habitual or experienced investor;
  • they are ‘large’ (the investor has net assets or turnover exceeding $5 million for the last two completed financial years); or
  • they are a Government Agency.

Wholesale investors for a particular offer of financial products

An investor is a wholesale investor in relation to a particular offer of financial products if:

  • they are an eligible investor in relation to that offer (see below);
  • the minimum investment amount payable by the investor is $750,000;
  • the investment amount, plus any amounts previously invested by the investor for the same financial products from that provider add up to at least $750,000;
  • it is proposed that the investor will acquire the financial products under a bona fide underwriting or sub-underwriting agreement (typically relevant to investment banks or other financial institutions and not individual investors); or
  • in relation to an offer of a derivative, the notional value of the derivative is at least $5 million.

Eligible investors

You can self-certify yourself to be an ‘eligible investor’ (which is a type of wholesale investor) in relation to a particular transaction if you have sufficient experience in acquiring or disposing of financial products to be able to assess:

  • the merits of the transaction
  • your own information needs in relation to the transaction; and
  • the adequacy of the information provided by any person involved in the transaction.

That certification requires a financial adviser, a qualified statutory accountant, or a lawyer to sign the certification stating they are satisfied you have been sufficiently advised of the consequences of self-certification and have no other reason to consider the self-certification is incorrect or that further information or investigation is required.

Source: www.fma.govt.nz/consumer/investing/types-of-investments/wholesale-investors/

To find out more about our current investment opportunities, click here.

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