Investment – floating rates

Floating rates

An investment option with a difference catches Ian Wishart’s eye

There are investments you can admire on paper, like bank balances or share portfolios – in the latter’s case sometimes something you can only admire on paper because it turns out to be less impressive in reality.

There are investments you can wear, like gemstones, and then there are some you can live in, like houses. Then there’s the second tier of what we loosely call ‘investments’ – flash cars, bloodstock and other items that may or may not hold their value but which are generally enjoyable along the way.

For most people though, some things remain out of reach. Some might, thanks to the property boom of the previous six years, have enough equity in the house to technically slap $400,000 on the desk and buy a Ferrari, but they also know that it’s just a touch extravagant given the cost to use ratio.

For Simon Barker and Lachlan Wilkinson channeling that desire for a good time into a more practical avenue has led to the expansion this year of Ownaship, the company that effectively puts boat ownership in the reach of ordinary families and businesses.

The concept is simple: most pleasure boats are only used for a few days a year, not just because of the time out on the water but also because of maintenance, cleaning and other below-the-line opportunity costs. But what if you offered people the chance to buy one-tenth of a boat and get a guaranteed 30 or more days of use per year.

“You’re not tying all your capital up in something you hardly use,” explains Barker, “instead you’re spending only a fraction of the cost and the company looks after the maintenance.”

“Essentially,” adds founder Wilkinson, “it’s a walk-on, walk-off boat ownership service. You make a booking online, the boat’s ready when you and your family come down to the marina, and off you go for an afternoon’s fishing or cruising. When you come back, we take care of cleaning the boat and putting it away. There’s nothing to tow, nothing else for you to do.”

While Wilkinson acknowledges people sometimes form private partnerships to share boats, they usually fall apart after a while because of the inconvenience – issues over boat storage, access to the craft, whether the last guy properly cleaned it and so on. So a corporate model, he says, overcomes all that.

“People’s lives are getting busier. We don’t have as much time anymore and the whole walk on walk off thing we have is really appealing to people.

“Our biggest market, at the moment, is people with families who want to own a boat, want their kids to experience that traditional kiwi way of life, and maybe want to come down after work and go for a fish for a few hours.”

Although they offer smaller Rayglass leisure craft at one level to cater to the average boatie, they’re finding increasing demand for million dollar luxury craft which, on the one-tenth basis, can give a family or a corporate access to a seriously luxurious getaway or entertaining venue whenever they need it.

“We’ve doubled our fleet this year,” says Barker. “We’ve brought on a brand new Mustang 32, and a Rayglass 25 which I call our ‘bread and butter’, and we’ve got a brand new Rayglass 4000 which is coming in November as well.”

The business plan required Ownaship to fully allocate shares in the new craft by next March, but demand has been so strong it appears they’ll be fully subscribed by Christmas, in time for the hot summer.

The exit strategy for those looking to trade up or move on is simple too. Because the share parcels are governed by a prospectus, they can be sold to new customers at market prices. There’s been no shortage of buyers for the occasional secondary opening that comes up.

“No, they’ve been snapped up really quickly this year,” says Wilkinson.

As one of the many kiwis who’ve fantasized about owning a boat but don’t like the hassle, the shared ownership concept is a good one. Now, if I could only find time between feeding the kids, running the magazine, publishing and writing the next book…