Great Southern Plantations is one of the fastest growing banks that you’ve never heard of.

For the most part of the “noughties” Great Southern has been writing
loans to plantation growers as part of an attractive tax-based
investment scheme, which has a product ruling from the Australian
Taxation Office.

The company is not actually a bank, but rather a forestry company.
Great Southern also does a lot of lending, and takes decisions about
which loans are funded by its partner in this enterprise, Adelaide Bank.

“We’re a fund manager, a boutique fund manager in the agribusiness
space,” said David Ikin, head of public relations at Great Southern.

Last year the company loaned money to 90 per cent of the people who put
$355 million into its plantations. And this year it expects again that
90 per cent of its growers will be financed this way. Of these loans,
most are funded by Adelaide Bank.

According to Great Southern’s annual report, Adelaide Bank had
securitised $179 million worth of loans last year. Most of these
comprised interest-free loans of up to two years and another $84
million in principal and interest loans of up to ten years.

Adelaide Bank’s annual report said that it had secured $200 million in
“portfolio funding” in three months. The report said it hoped to lift
funding to $750 million by the end of the 2005/2006 financial year and
to secure $1.8 billion in loans through similar schemes by June 2008.

Most of the people becoming “growers” with Great Southern are referred
by their accountants or financial advisers and are hoping to minimise
tax while investing. For example, a person in the top tax bracket who
invested the minimum $3000 (plus GST) in a plantation would be able to
finance it with an interest-free loan of two years and would be
eligible to an immediate tax rebate of 47.5 per cent.

Anthony Baum, head of funds management at Adelaide Bank, said that it
is securitising loans “given under a very diligent credit policy and
procedures”.

As a reluctant Baum said: “This business is actually so fantastic I don’t want to talk about it.”

Peter Fray

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