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Investment News

People: FMG chief heads for the sun

Good Returns speaks to former Farmers Mutual Group ceo Michael Millar about his move to Nelson, his business plans and his seasoned opinions on the financial marketplace.

Tuesday, May 22nd 2001, 9:47AM

by Sonia Speedy

Michael Millar's got the look of a man in control. He sits in his new office admiring a new piece of artwork and talking about his daughter's upcoming wedding.

He's making more room in his life for recreation now, giving up his role at Palmerston North-based Farmers Mutual Group in January to set up a new business in Nelson. It is simply called Investment Services, to go with his new simplified life.

"Nelson is a lifestyle choice for me," he says.

"I'm at a point in my working life where I've chosen quite deliberately to be located where I want to be and then develop a business around this particular vocation."

Millar says it was time to leave Farmer's Mutual.

"I'd been there for seven years. When I joined the company I was of the opinion that five years as ceo of a small company, in which one sort of dominates strategy, was probably enough."

His new business utilises his ability to identify opportunities for New Zealand small business, and his familiarity with what investors are looking for, he says.

"Many small businesses in New Zealand run up against an inability to obtain the necessary capital to enable their growth, particularly if they're relatively new. What we're doing here is identifying good small New Zealand businesses and putting investment funds in touch with them."

Investment Services also provides senior management for these small companies, when needed.

The company is currently focusing on three enterprises, including syndicated forestry, with a group of investors involved in a "couple of significant forests in the North Island".

It also manages four property syndicates, totaling around $60 million, and The Crossings vineyard partnership in Marlborough.

Despite syndicated properties having had a bad reputation in the past, Millar says they're still a good way to go when handled the right way.
"There is a reaction about property that had its gestation period back in the late eighties when the property market died and with it liquidity in the syndicated property market."

Millar says that for a while the only type of investment that investors were prepared to put money into was listed property. "Say you start up from scratch a listed property vehicle, invariably you will find that vehicle on the stock exchange trades at a discount to asset backing.

"I personally don't have a lot of sympathy for putting money into something to immediately see the marketplace put a discounted value on it."

Millar says he was more comfortable with the less liquid syndicated properties as long as precautions were taken and clear objectives set, including creating exit strategies, before getting started.

"The feature of our syndicated properties is that they all tend to be 'big box' kind of properties, of the nature of The Warehouse buildings, Big Fresh or Placemakers. They are the kind of building with large simple construction, good floor space, good parking, versatile usage and lots of tenancy opportunities out there should a tenant fail."

He believes the wine industry is one of the "really good stories in New Zealand".

"What is clear to me is that in respect of some our wines, sauvignon blanc in particular, we do have a difference in the wine we are capable of making. It's associated with our climate - those long sunny days and the cool nights that leave us with a fresh, bountiful wine."

Millar says the statistics show that even though production volumes were growing, price was also increasing.

"That tells you very clearly that we're not anything like reaching the limit of demand for our product."

He believes there is a great future in other varieties as well, with New Zealand already being noticed for its pinot noir and some reds.
In terms of the health of the funds management and insurance market place, things are generally looking good, he says.

The financial services world at large was the subject of significant consolidation, which was happening in a lot of industries, including the wine industry, he says.

Old boundaries were collapsing, such as those between insurance and banking, and companies within both industries were becoming less visible in a "bricks and mortar" sense.

"I don't think there are any banks in New Zealand that don't offer insurance and many insurers - AMP is a classic case - are heavily involved in the banking industry. What we used to call fund managers are now operating right across the board and the big companies that come out of Europe and the US are seeking to dominate."

This was the result of electronic transactions becoming the norm, and more people choosing to enter websites, meaning brand strength was becoming hugely important.

"I think it's a reasonable bet that international boundaries will come down and you could be an American and buy your insurance out of New Zealand if you so want.

"Certainly many, many New Zealanders have a large proportion of investable funds offshore through an overseas unit trust company or investment manager."

As his new business finds its feet, Millar is working five days a week, but he's hoping to scale that down to four, so he can put more energy into other interests like tramping and fishing.

After buying a 40-acre block out of Appleby with his wife Gillian some years ago, they were now designing a house for it and currently had 200 lambs.

With his wife due to move down from Wellington in a few weeks, both were also keen to get into some skiing and horse riding.

While he waited for her to arrive Millar was dividing his time between "cruising the boat markets" and the financial markets.

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ASB Bank Term Fund - 12 months 4.30    4.18    4.37
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BNZ Term PIE - 150 days 3.65    3.75    3.92
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BNZ Term PIE - 2 years 4.25    4.45    4.65
BNZ Term PIE - 18 months 4.15    4.34    4.53
BNZ Term PIE - 12 months 4.10    4.28    4.48
BNZ Term PIE - 9 months 4.00    4.18    4.37
BNZ Term PIE - 6 months 3.90    4.08    4.26
BNZ Term PIE - 90 days 3.35    3.44    3.60
Co-operative Bank PIE Term Fund - 6 months 4.00    4.11    4.30
Heartland Bank Term Deposit PIE - 12 months 4.60    4.54    4.74
Kiwibank Term Deposit Fund - 90 days 3.30    3.38    3.53
Kiwibank Term Deposit Fund - 6 months 3.75    3.85    4.02
Kiwibank Term Deposit Fund - 12 months 4.10    4.20    4.41
Kiwibank Term Deposit Fund - 150 days 3.60    3.70    3.86
Kiwibank Term Deposit Fund - 120 days 3.30    3.38    3.53
RaboDirect Term Advantage Fund - 12 months 4.30    4.42    4.62
RaboDirect Term Advantage Fund - 6 months 4.10    4.22    4.41
RaboDirect Term Advantage Fund - 90 days 3.55    3.65    3.81
Westpac Term PIE Fund - 150 days 3.60    3.70    3.87
Westpac Term PIE Fund - 120 days 3.50    3.60    3.76
Westpac Term PIE Fund - 18 months 4.00    4.11    4.30
Westpac Term PIE Fund - 12 months 4.00    4.11    4.30
Westpac Term PIE Fund - 6 months 3.75    3.86    4.03
Westpac Term PIE Fund - 9 months 3.70    3.81    3.98
Westpac Term PIE Fund - 90 days 3.35    3.45    3.60
Westpac Term PIE Fund - 2 years 4.15    4.27    4.46
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