“If you’d have to said to me 10 years ago that i’d have a property portfolio in Sweden, I would never have believed you,” chuckles Nigel Evans.
And that’s putting his success rather modestly. In little more than eight years Nigel's company Evanridge, co-owned with two friends and fellow dairy farmers, has built up a £40million bricks and mortar empire in the Nordic country and is now looking at a £100million share issue.
The remarkable story started around 15 years ago, when Nigel saw the miserly returns served up on his parents’ pension, despite years of hard graft and saving.
“They were disappointed,” says the 58-year-old, who still lives on his Pembrokeshire farm. The underlying assets had performed well, but after a closer look Nigel could see how middlemen and management fees had substantially eroded the eventual payout.
The farmer and his wife immediately stopped paying into their pension, and he took full control of their investments.
His friend Bill Ridge, who he knew through a dairy farming group, decided to do the same thing. The pair attended business courses and swapped tips.
The investment returns were good, and they soon found that other farmers were asking for advice - that was when they first had the idea for a collective investment pool.
Nigel turned to his accountant Huw Evans for advice, who also wanted to be a part of the venture, but advised that they would need to look into the financial regulation, as they’d in effect be starting up a fund.
The trio explored various investment ideas by reading and travelling to meet with fund managers.
Nigel was particularly inspired by Warren Buffett (who built up his investing empire from scratch) and whom he describes as a business hero.
“He is one of the world’s best investors,” says Nigel. “You don’t need to reinvent the wheel to make things work... We were speaking to people – not noisy high-profile people but those who, like us, were told ‘you can’t do that’ but they have done it.”
Eventually they were tipped in the direction of Sweden, a market where rents are regulated (65% of people live in rented homes), but property is in short supply, helping to provide investors with steady returns.
After researching the concept, they pitched the idea to a group of friends and connections in 2006.
Evanridge was born and the strategy was simple: residential blocks and commercial buildings in small
Swedish commuter towns where yields were favourable and where they could add further value through refurbishment.
The minimum investment for those who wanted in was £50,000 - no small sum - but they were aiming for a return of 12%.
To their amazement, they raised around £5million from just 100 people.
“We had no track record and it was truly astonishing that people trusted us.... It was a hell of a leap to go from investing your own money to taking other people’s money... But everything that you ever want is outside your comfort zone,” comments Nigel.
They set about buying properties and working with a team of contacts in Sweden.
It was a success. Evanridge have managed to deliver returns of up to 20% for some investors, while charging an annual management fee of 1% of the gross property value.
A second fund followed in 2007 and more recently a third, which is set to close later this year. The entry for investment has since been reduced to £25,000. They now own around 500 apartments within 22 blocks in Sweden.
It seems amazing that dairy farmers have turned their hand to property investment with such impressive results. But business is business, says Nigel - it doesn’t matter what it is, it’s about making the numbers work.
As one Evanridge investor says: “I saw that Nigel and Bill ran good farms so I trusted them.”
Around 85% of their investors are farmers, who have also been disillusioned by savings and pensions returns.
Of course, it’s not all been smooth sailing. The worst moment was at the beginning, says Nigel. Their bank in the UK managed to ‘lose’ their cash when transferring it to Sweden to complete on the first property they bought.
The contract stated that they would lose the £1million deposit if they didn’t get the rest of the cash to the vendor. At the last moment their bank in Sweden stepped in and made them a 24-hour loan to cover the completion.
But, the best moment was also at the beginning. “Ok, we had the money, and we were actually going to do this – that was the best feeling,” said Nigel.
The company is now in the process of wrapping up its first two funds and returning money to investors or rolling it over into a third fund.
After years of planning applications, the company is also in the process of building its first property in Sweden from scratch.
And they are in the preliminary stages of planning their fourth fund, raising cash through a £100million stock market flotation or rights issue in Sweden.
They now spend more time away from home and the farm travelling.
“I’m 58 and I feel that I could carry on doing this for another ten years, at least,” says Nigel. “We really enjoy what we do – we’re business men who just happen to be farmers.”