What is a Wholesale Investor?

This guide aims to demystify some of the concepts around what it means to be a wholesale investor and if you qualify to invest in wholesale financial products.

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.

There can often be some confusion around what it means to be a wholesale investor and which investment opportunities are deemed wholesale.

To help demystify the world of Wholesale Investing, Mackersy Property has a dedicated Investor Relations team who are on hand to help you every step of the way. To find out more, contact us.

The information provided in this guide is of a general nature and should not be considered personal investment advice. Investing in commercial property, as any investment, carries potential risk. Before investing, please seek advice from a financial advisor who can advise on the best options for you.

Experienced Investors

Mackersy Property investment opportunities are not ‘public offers’ for the purposes of the Financial Markets Conduct Act 2013 (FMCA) and are only open to Wholesale Investors. This means to invest with Mackersy Property, each investor must meet the FMCA criteria for qualifying as a Wholesale Investor.

A Wholesale Investor is a person (or persons, trust or business) who can demonstrate a good understanding of financial products and how they operate including an assessment of the benefits and risks or meet certain asset or turnover thresholds. Further information is also available on the FMCA website (https://www.fma.govt.nz/consum...).

Mackersy Property must also complete due diligence on all investors in accordance with the Anti-Money Laundering and Countering Financing of Terrorism Act 2009 (AML-CFT). This means part of Mackersy Property's application process involves the collection of certified documents to prove identification, address and source of wealth.

Mackersy Property investment opportunities are open to non-New Zealand residents. In each case, Mackersy Property will give consideration to the rules and regulations pertaining to overseas investment under the Overseas Investment Act 2005.

What is the Definition of a Wholesale Investor?

A wholesale investor is a person or organisation with sufficient previous investing experience, meaning they do not require disclosure.

An investor is classified as 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’ (have net assets or turnover exceeding $ 5 million for the last two completed financial years);
they are a Government Agency

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

the minimum investment amount payable by the investor is $750,000;
the investment amount, plus any amounts 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 $5million.

The flow chart demonstrates how you can determine if you qualify to be a Wholesale Investor and how you can be qualified. For more information on the requirements for becoming a wholesale investor, visit the FMA website: https://www.fma.govt.nz/consumer/investing/types-of-investments/wholesale-investors/.

Ability to Understand the Merits and Risks of an Investment

As Mackersy Property investments are only open to wholesale investors, some of the Financial Conduct Act disclosure and governance requirements do not apply. This means there are fewer protections available than there are to retail investors.

It is important that you have experience in investing so you can approach each investment opportunity with a full understanding of the potential risks involved.

You should speak with a financial adviser if you are considering investing in a wholesale investment offer.

Fewer protections but more opportunities

Wholesale investments are designed to allow expert investors to make investments without the stringent disclosure required for regulated investment offers.

Mackersy Property uses this type of investment to ensure quicker turnaround times for equity raises. Reducing these time frames gains Mackersy Property and our investors' access to some of the best products on the market.

However, this means some protections do not apply to wholesale investors. For example, a product disclosure statement is not required for wholesale investors. This document sets out the key characteristics, risks and features of the investment in language suitable for an inexperienced investor.

The firm offering the product may also not be licensed with the FMA, which means the activities of the firm are not monitored. There is also no licensed supervisor, or independent entity to look after the interests of investors as there is with debt securities such as bonds and managed investment schemes.

Wholesale providers are also not required to provide access to a free independent dispute resolution scheme if there are any issues.

Despite these differences in regulations, the offeror must still comply with ‘fair dealing’ requirements which ensures the offeror does not engage in any misleading or deceptive conduct, make false or misleading statements and make unsubstantiated representations.

Certification

To qualify as a wholesale investor using an Eligible Investor certification, an investor must obtain from a New Zealand authorised financial advisor, New Zealand lawyer or New Zealand or Australian chartered accountant a confirmation of the investor’s “Eligible Person” certification (clause 41(1)(c), Schedule 1, FMCA).

To confirm the certification in accordance with clause 43 of Schedule 1 of the FMCA, the certifier must consider the investor’s grounds for self-certification and

be satisfied that the investor has been sufficiently advised of the consequences of the certification; and
have no reason to believe that the investor’s self-certification is incorrect or that further information or investigation is required as to whether or not the certification is correct.

Any authorised financial advisor, chartered accountant or lawyer cannot confirm the self-certification if:

they are an associated person (as defined in section 12 of the FMCA) of Mackersy Property or the relevant investment entity; or
where they have provided professional services to Mackersy Property, the relevant investment entity or any related body corporate of those entities within the two years immediately prior to the completion of the investor’s investment (clause 42 (2), Schedule 1, FMCA).

Mackersy Property and the relevant investment entity must be satisfied that any professional confirming an investor’s self-certification as an Eligible Investor is sufficiently independent of the managers of the scheme, the investment entity and any related entities before it can rely on the fact that the investor is an Eligible Investor.