Absolute Capital to launch PINs product In New Zealand

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First capital protected income product to be offered in New Zealand. First to offer NZ retail investors "rear-ended" performance fee structure.

Tuesday, November 29th 2005, 11:15AM

Absolute Capital Limited is launching an innovative Packaged Income Notes (PINs) Series 2005-1 offer in New Zealand designed to generate returns that are both attractive and competitive whilst also being stable through a 100% capital protection provided by ABN AMRO Bank N.V. at maturity.

Absolute Capital Limited, a leading structured credit investment specialist, is the Investment Manager of the portfolio and have a history of being involved in innovative structured credit and structured investment transactions.

Key features:

• Minimisation of risk provided by ABN AMRO’s capital protection at the conclusion of the seven year product term
• 9.25% pa targeted yield paid quarterly.
• Additional bonus interest of up to 18% - creating highly competitive total targeted returns of up to 10.95% per annum over the life of PINs (seven years) for investors who hold their investment to maturity
• Regular coupon generated quarterly income
• Rear ended performance fee structure offered to retail investors for the first time in New Zealand generating considerable alignment of investor and manager interests throughout the life of the investment
• Product income supported by a diverse range of internationally diversified credit and other investments
• NZDX listing creates the flexibility of secondary trading

The product’s returns will be generated by a diverse Credit Investment Portfolio that will be invested in 20 specialist credit managers who in turn invest in a range of countries and industries with a number of strategies.

Absolute Capital Limited is the Investment Manager of the portfolio of managers as is a specialist boutique firm focused on selecting specilsit credit managers.

The results, a highly competitive targeted 9.25%pa and a maximum final interest payment to investors of 18% of the principal amount of PIN, means that at the end of the seven year term investors have the potential for total returns of up to 10.95% per annum over the life of the PINs if held at maturity.

This compares favourably with many investments such as hedgefunds, that don’t also offer the stability of capital protection or the attraction of regular quarterly income.

The rear-ended performance fee structure offered by PINs Securities NZ Limited for this PINs product has never been made available before to New Zealand retail investors (it is usually only offered to institutions.)

As the Investment Manager, Absolute Capital Limited only benefits if the product exceeds, amongst other things, the payment to investors of the targeted 9.25%.

In addition, there are no entry, exit or management fees payable. Instead the company will be entitled to a performance fee calculated as a share of any excess returns from the Credit Investment Portfolio.

The product will be listed on the NZDX allowing 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 opens on 28th November and will require a minimum investment of $5,000.

Commenting on the launch Deon Joubert, Absolute Capital Limited’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 be able to offer a product that provides a combination of high security, high performance and the flexibility to realise the investment through a secondary market.” With 100% capital protection at maturity provided by ABN AMRO Ban N.V. and competitive returns that will be generated from highly diverse international investments Joubert believes that this is a better-hedged product for a less certain time.

“We are also proud to be the first to offer New Zealand’s retail investors the type of rear ended fee structure that, till now, has only been offered to institutions. We hope that by only taking a performance fee if this product exceeds its targets in seven years time we are demonstrating our confidence in this product and our long term commitment to New Zealand’s investors” Joubert added.

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