The Australian Cricket Bat Willow project is squarely in the ‘exotic’ category. One could make the mistake of quickly dismissing this as just a pipedream of a few nuts who are passionate about cricket. However when you dig a little deeper you can see the sound reasons for an investment in this project.

 

The premium timber for the manufacture of a cricket bat is “English Willow.  However Indian cricket bat manufacturers are using more of the Kashmir and Poplar willow varieties as substitutes for the ‘real thing’. Grown in the wild these trees are not of the same quality as purpose grown English Willow. At present Indian manufacturers make about 240,000 bats a year from English Willow, on top another million or so from inferior timber. The ‘blade’ of a cricket bat in its raw state is called a ‘cleft’. Each of these ‘clefts’ to create a top quality bat, costs between AUD39.60 and AUD6I.89. My own research found that a finished English Willow bat retails for somewhere between $220 and $440 each. The ACBW project uses price ranges for each ‘cleft’ of $20 to $50 each. This seems to be well within the range currently being paid for quality willow.

 

The Investment

Investors pay an initial fee of $5500 which is used to plant 20 Salix Alba var. Caerulea trees. The stock for this project has been sourced from original stock imported from England by the Crockett family. Their plantation was Australia’s main supplier of willow for bats until 1956 when Slazenger bought the companies assets, and cut down all but 13 of the trees in the plantation.

 

The initial planting cost, which is the equivalent of $275 per tree, plus $13.75 per year (indexed to CPI and inclusive of CPI) per tree for maintenance and rent, makes growing willow expensive compared to most other tree crops. However, at the reward end of the spectrum, each tree is expected to yield 30 ‘clefts’, which as noted above should be worth between $20 and $50 each. At the low end of the estimates, the dollar value per tree then would be $600, or at the upper end of the range $1500 per tree.

 

The willows are grown on a site north west of Swan Hill on the Murray river. The plantation has a water license to draw the required irrigation water from the Hume Dam.

 

The expected time to maturity for the trees is 11 years. There is no income in the intervening period. At the conclusion of the project the trees are harvested, ‘clefts’ are sold, and proceeds distributed to growers. There is a harvest fee (apart from the normal cost of harvesting) built into the management agreement to provide a strong incentive by the manager to maximize the price obtained per cleft’. The manager receives 20% of the revenue on each ‘unit’ which exceeds $18,000. This serves two purposes. First it is an incentive to minimize the harvesting cost while not compromising ‘cleft’ quality. Second, it means they will be doing all they can to ensure that you get the best price for each ‘cleft’. At the price target for premium ‘clefts’ of $50 each, and 300 ‘clefts’ per lot, the manager would be getting an $1,623. Incentive fee. At that level however the Grower is also going to be doing very well out of the investment.

 

 

Features

Up to 8% cash rebate (see below)

$5,500 per unit

IRR of up to 15.50%*

11 year project term

100% tax deduction for investment amount

 

Commissions & Cash Rebates

With tax effective investments we will receive a brokerage payment consisting of a 'commission' & 'marketing allowance' which is paid from the company that you invest with.  It is not deducted from your invested funds. With regards to Cricket Bat Willow Project 2007, Fundbroker will receive an 5% commission and a 5% marketing allowance, making a total brokerage of 10% of the amount invested.  We will provide a cash commission rebate as a percentage of the funds you invest as shown in the table below:

 

 

The cash rebate is paid to you as soon as we receive our commission payment and is related to the number of units in the project (i.e. 3 units will provide a 6% rebate, 9 units or more an 8% rebate)

 

 

Further Information

For further information please download any of the following files or right click on the button and 'save target as' to download to your computer (all files are in *pdf format):

 

** Note that the research is the most updated available. Due to the small scale nature of the project they have decided to not outlay large amounts of investors funds for updated research.

 

 

 

IMPORTANT : This information has been prepared without taking into account your investment objectives, financial situation and particular needs. National Financial Solutions Pty Ltd (the authorising licensee) makes no recommendations as to the merits of any investment opportunity referred to on this site or via email correspondence. All indications of performance returns are historical and can not be relied upon as an indicator for future performance. Any investment decision in the products listed is entirely yours. NFS bears no responsibility for the appropriateness of the investment to your circumstances.  NFS will not be held responsible for the performance or security of any investment going forward. Furthermore NFS recommends that you seek advice from an independent person as to the appropriateness of any investment that is placed through our service.

With all of these types of investments you should seek independent taxation advice to determine whether this investment suits your circumstances. Please read the important information section.

By listing this investment on our site we are by no means endorsing this investment, manager or product.

* IRR upper range from independent research report