Information only disclaimer. The information and commentary in this email are provided for general information purposes only. We recommend the recipients seek financial advice about their circumstances from their adviser before making any financial or investment decision or taking any action.
A few weeks ago, we announced the launch of NZAB Capital and our new $500 million agricultural lending platform. At the time of launch, approximately $30 million of loans had already been drawn.
Only a short time later, that number has now grown to more than $80 million of lending either drawn or committed.
While NZAB Capital is an exciting new part of our business, it is important to reinforce that NZAB’s core business remains advisory led.
For nearly a decade, NZAB has worked alongside farming businesses across banking, debt structuring, succession, growth, governance, capital structuring, acquisitions, and long term strategic planning. A significant part of what we do every day is still helping farmers improve outcomes with traditional main bank funding through better structuring, stronger presentation, and clearer strategic alignment.
In fact, one of the interesting things we’ve already seen since launching NZAB Capital is that some situations initially presented to us as “non bank lending opportunities” have actually ended up back with a main bank once the strategy and structure were better aligned.
That remains a very important part of our philosophy: Capital follows strategy and farmers goals, not the other way around.
What NZAB Capital does is broaden the range of capital solutions available to farmers when timing, leverage, speed, transitional periods, or structure mean a traditional bank may not currently be able to support a strategy in full.
That growth in demand since launch has reinforced something we already suspected - New Zealand agriculture is increasingly requiring a wider range of capital options sitting alongside the traditional banking system.
In many ways, this is the re-emergence of genuine non bank agricultural lending in New Zealand
What is a non-bank lender?
Non-bank lenders are already a very established part of the New Zealand financial system.
Most New Zealanders interact with non-bank lending regularly, even if they don’t realise it.
In residential housing, non-bank lenders have become a significant part of the market, particularly for borrowers who are self-employed, have complex structures, require faster approvals, or sit outside standard bank criteria.
Non bank lending has become very notable in the commercial property and business sectors. Non-bank lenders now play a major role funding development projects, transitional property transactions, business acquisitions, bridging finance, and restructuring situations where traditional banks may be slower moving or more constrained by internal credit settings.
Globally, this trend has accelerated significantly since the Global Financial Crisis, as banking regulation tightened and alternative capital providers stepped in to fill funding gaps that emerged across different sectors of the economy.
Agriculture however has remained relatively under serviced by genuine non-bank first mortgage lenders in New Zealand for quite some time.
That is the gap NZAB Capital is seeking to help fill.
What NZAB Capital actually is.
NZAB Capital is a first mortgage agricultural lending platform focused on transitional lending.
That word transitional is important.
We are generally not providing permanent long term debt solutions over five years. Instead, NZAB Capital is designed to support periods of transition where there is a clear and credible pathway toward a stronger long term outcome- whether that involves refinancing back to a main bank, completing a development or acquisition strategy, restructuring the balance sheet, executing a turnaround plan, or repositioning the business over time.
Typically, these are situations where the underlying strategy makes sense, but the business requires additional flexibility, time, speed, or transitional capital to get from where it is today to where it is capable of being over the next few years
Typically, loans are structured over three to five years with a clearly identified exit strategy from the outset - in a lot of cases this will be a refinance to a main bank.
Importantly, this is not rescue lending.
Many of the businesses we are seeing are good operators with strong assets and sensible long-term strategies. The challenge is often that the strategy requires time, flexibility, speed, or leverage levels that sit outside where traditional banks are currently comfortable.
In some cases, NZAB Capital may only support a transaction for a relatively short period before the business naturally transitions back toward mainstream bank funding.
In fact, one of the more interesting things we’ve seen since launch is that a number of situations initially presented to us as “non-bank lending opportunities” have actually ended up back with a main bank once the transaction was better structured or repositioned appropriately.
Where we’re seeing demand emerge.
The range of situations emerging across the market has been broader than many people may initially expect.
Some examples include:
Some of these involve challenge or transition, others involve growth and opportunity.
Equally important - what NZAB Capital is not.
It is equally important to understand that NZAB Capital is not designed to fund every situation.
Transitional capital only works when there is a fundamentally sound strategy underneath it and a credible pathway toward stabilisation, refinance, growth, or value realisation over time. Where debt levels are clearly unsustainable, operational issues remain unresolved, or additional capital is simply delaying difficult commercial decisions, more lending is rarely the right answer.
Ultimately, strategy has to come first.
A broader capital system for a more complex sector.
What is becoming increasingly clear is that New Zealand agriculture is now more capital intensive, more timing sensitive, and more strategically complex than it was even a decade ago.
As that continues, the sector will need a wider range of capital options sitting alongside traditional banking relationships.
That does not reduce the role of banks. In many cases, it strengthens it. The best outcome is often not non-bank lending instead of bank lending, but the right capital solution at the right time, with a clear pathway back to the most appropriate long-term funding structure.
The future is not about replacing traditional bank lending. It is about building a more layered capital system around New Zealand agriculture, where different pools of capital can support different stages of a farmer’s strategy.
That is why NZAB Capital is seeing demand from a wide range of situations. Some involve pressure or transition. Others involve growth, timing, succession, development, acquisition, or opportunity. Many are not distressed businesses at all. They are good farming businesses trying to move through a period where the strategy makes sense, but the timing, leverage, or structure does not currently fit neatly inside standard bank settings.
Over the coming weeks, we will share more real-world examples of the situations now emerging across the market, and what they tell us about the future of capital in New Zealand agriculture.
A bank constraint does not have to be a business constraint.
If you have an opportunity, transition, or capital question that does not fit neatly within current bank settings, it is worth having the conversation early.
In some cases, the right answer may still be a main bank solution, once the strategy is better structured and presented. In other cases, transitional capital may help bridge the gap between where the business is today and where it can realistically get to over the next three to five years.
Either way, the starting point should be the strategy, the people, and the pathway forward.
If you would like to discuss an opportunity, email us back or contact one of our NZ wide Client Directors here.
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NZAB, 335 Lincoln Road, Addington, Christchurch, New Zealand 8024, 0800 NZAB 12
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