Opting to go down the wholesale route

Not yet a wholesale investor? It’s time you found out what you’re missing out on.

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It’s not unusual for Gary Thorburn, Head of NAB’s Global Investment Desk, to get a call from a client who is wondering why they haven’t heard about the latest corporate trade in the newspaper.

The answer is simple: they aren’t on NAB Private’s Wholesale Investor Register.

In fact the vast majority of corporate bond deals – those that are traded over the counter rather than on an exchange – are out of reach of your regular retail investor.

Professional vs Sophisticated

That’s because these deals are only open to wholesale investors – to those people who are deemed professional or sophisticated investors under the Corporations Act (2001), or the holders of an Australian Financial Services Licence.

It may sound complicated but it’s pretty straightforward, says Thorburn. Someone who holds, or has control over, at least $10 million in gross assets may be deemed a professional investor. On the other hand, someone who holds net assets of at least $2.5 million or has a gross income of at least $250,000 a year for the last two financial years may be deemed a sophisticated investor.

In order to join the NAB Private Wholesale Investor Register, it’s a matter of confirming that you meet these criteria, through self-certification if you are a professional investor or by way of your accountant if you are a sophisticated investor.

The upside

The rationale behind the government’s definition of a wholesale investor is that anyone who has amassed such large sums of money can be relied on to look after their own financial interests, making quick, timely decisions about the financial markets.

The retail investor, in contrast, is viewed as needing protection. As a consequence, not all deals can be shown to retail investors,

For those clients on NAB Private’s Wholesale Investor Register, there is a whole raft of opportunities, particularly in over-the-counter fixed income deals. The Australian unlisted fixed income market is approximately 10 times the size of the listed fixed income market.  “Having the opportunity to participate in these deals is the really big opportunity for our clients here,” says Thorburn.

Being a wholesale investor also allows clients to capitalise on NAB’s position as a large business bank that originates a lot of trades, says Thorburn. As he notes, “by originating trades we create the opportunities for our investor clients.”

Some of the offerings of the past 12 months include high yielding and diversified issues such as Centuria’s Senior Secured Notes, Bendigo & Adelaide Bank’s Subordinated Debt, NEXTDC Ltd’s OTC Bond and Subordinated Debt from Suncorp Group (AAI Ltd).

Global opportunities

There are other opportunities outside of fixed income. MLC Private Equity Co-Investment Fund ll was made available to wholesale investors earlier this year.

There is also the chance to invest in fledgling companies before they are up for public sale. Indeed wholesale clients of NAB Private can now get special access to venture capital raisings by global technology companies thanks to a recent deal between NAB and leading global equity crowd-funding platform OurCrowd. The recent deal was the first of its kind and highlights NAB’s commitment to deepening customer relationships and offering innovative solutions for a changing environment.

Buyer beware

Of course, being a wholesale investor does not come without its attendant risks.  “All our – clients are expected to do their own research,” confirms Thorburn, adding, “But it’s difficult to do your research if you haven’t been shown the deal in the first place.”

While wholesale clients are expected to rely on their own research, they do have access to NAB’s extensive research capabilities, receiving the bank’s latest market insights and research upon joining the Wholesale Investor Register and  nabtrade.*

It’s not for everyone though. For investors that don’t have the time or inclination to do their own research, JBWere provides an attractive alternative, says Thorburn, as they can offer personal advice.

Yet for those who are keen, NAB Private offers a whole new world of independent investing with exclusive investment opportunities to help diversify and maximise portfolio returns.

 

Interested in becoming a wholesale investor? Speak to your NAB Private banker who can help you register to start receiving exclusive investment opportunities.

The information contained in this article is general only, and has been prepared without taking into account your particular circumstances and needs. Before acting on the information in this article, you should assess or seek advice on whether it is appropriate for your needs, financial situation and investment objectives.

* Note: If you choose to unsubscribe from NAB Private’s Wholesale Investor Register at some stage in the future, you will not be automatically taken off our subscribers’ list for NAB marketing materials. To do so, you will need to unsubscribe separately.