The skifields on Mt Ruapehu are much loved by the mountain community. The combination of location in a Dual-World-Heritage National Park, tough alpine environment, active volcano and difficultly in securing staff means that it's not an easy mountain to run a skifield on. But for the ski community who love Mt Ruapehu, the effort is worth it.
This survey aimed to assess appetite from the wider mountain community to invest and purchase shares in the business that operates the skifields. The survey was initially distributed by the Ruapehu Skifields Stakeholders Association then after some discussion, PwC agreed to send the survey to the Ruapehu Alpine Lifts general email marketing list.
The total expressed investor demand was $13 million over the next 5 years, with $6 million of investor demand in Year 1. 2,287 people expressed interest in investing in the skifields. Average investment demand was $5.7k per investor with $5k being the most common amount. The majority of potential investment was from investors between $5k to $50k.
The skiers are the natural owners of the skifields because they are the most likely to support the skifields in good years and in bad. By spreading ownership broadly and allowing for new investors over time, the community model allows for ongoing capital raising.
The sentiment from the survey supported adopting a non-profit model that focuses on re-investment of profits into maintenance and improvement of the assets. The non-profit approach is compatible with investors achieving a return on investment through capital gains. The preference for allowing capital gains is significant and has been incorporated into the recommended Skifield Governance Structure.
The wider capital planning issue for the skifields requiring $10 million to $15 million over the next 5 to 10 years and potentially tens of millions more in the future has been addressed in the various long term skifield proposals. Essentially, the skifields ongoing operation, contingency funds and/or capital improvements would be funded through a mix of
Revenue: Retained earnings from ongoing operating profits, annual season pass sales and/or one-off sales of product pre-purchases such as 5 Year Season Passes or the right for a Life Pass Holder to continue skiing post-insolvency.
Equity: Sale of shares in the business that operates the skifields to a mix of large and small investors. (The subject of this survey.)
Debt: Long-term strategic debt from aligned tourism partners with appropriate performance and solvency guard-rails.
Download Survey Results PDF (13 Pages)
We are publishing a detailed breakdown of the survey results in the hope that the analysis can be useful to PwC, MBIE and any parties who may be interested in purchasing the Mt Ruapehu skifields and might be open to allowing the community to become co-owners of the business.
A high-level summary of some of the key highlights are also listed below.
Size Range of Individual Investments: $5.7k Average
The average investment amount was $5.7k with the largest cohort of investors between $1k and $5k. The largest contribution was from the cohort of $5k to $50k investors.
Relationship to Skifields: Life Pass, Season Pass, Day Passes
Season Pass Holders had a higher individual average investment amount and a high mode (most common) investment amount. This reinforced the view that existing Life Pass Holders are highly motivated to see the skifields succeed but they are not the only mountain users with a deep and long-standing relationship with the mountain.
Relationship to Region: Holiday Homeowners, Mountain Clubs, Local Residents
Mt Ruapehu is a 'locals mountain' but those locals aren't always full time residents. The largest segment of investors by contribution was the holiday homeowners. Selfishly, their property prices may be tied to the success of the skifields but they are also likely to have intergenerational and long-standing connections with the mountain. Likewise, members of the Alpine Clubs were also significant potential investors. Local residents are absolutely essential to the survival of the business and could still be meaningful investors.
Timeline: Lessons from promoting the survey
The early April promotion to the Stakeholders Association email list drove a reasonable uptake but the promotion to the Ruapehu Alpine Lifts database accounted for the largest potion of investment and headcount of investors. This is consistent with the view that the best mechanism for a brand capital raise is the skifield operator themselves rather than an arbitrary third-party.
Historic Share Price:
Investors expressed a preference for a co-operative model that allowed for capital gains. To facilitate this the company could adopt a Net Asset Value share pricing mechanism that allowed for periodic trading windows in which the company could issue new shares along with modest secondary transfers among shareholders. Such liquidity would allow shareholders to realise the benefit of any increase in retained earnings during their time as a shareholder.
Overall, the survey confirmed that the wider mountain community have the appetite, willingness and demand to make meaningful investments into the skifields on Mt Ruapehu over time. The preference for allowing capital gains has been incorporated into the: Proposed Ruapehu Skifield Governance Structure