‘Crowd-farming’ platform co-operating with FSCA over licensing concerns

Livestock Wealth (Pty) Ltd says it is co-operating with the FSCA to ascertain the reasons for the Authority’s concerns after the Authority issued a statement this week warning the public to be cautious when doing business with Livestock Wealth and Livestock Wealth Financial Services (Pty) Ltd.

The FSCA said it is investigating both entities.

The Authority said Livestock Wealth may be unlawfully offering members of the public investments into livestock and/or agricultural products, offering profitable returns upon maturity of the livestock and/or agricultural products.

It said Livestock Wealth is not authorised to render any financial services-related business in terms of the FAIS Act.

In a statement released today, Livestock Wealth confirmed that it is not registered with the FSCA, but that Livestock Financial Services is registered with the Authority.

“Until recently, we were under the impression that Livestock Wealth was operating legally following correspondence from the FSCA in 2015 indicating that we did not need a licence to sell agricultural assets, after we proactively approached them in an attempt to register. Following the FSCA’s statement this week, we are co-operating fully with them to ascertain the reasons for their concerns and to ensure that we are operating within the letter of the law,” the statement said.

Livestock Wealth Financial Services is a Category I authorised FSP (No. 51237). The Authority said Livestock Wealth Financial Services is authorised to provide advice and intermediary services relating to insurance products and pension benefits, but it is not authorised to provide any financial services relating to deposits or investments.

The FSCA said was “of concern” that Livestock Wealth has been using Livestock Wealth Financial Services’ FSP number on its website. As a result, the Authority has commenced an investigation into Livestock Wealth. It is also investigating Livestock Wealth Financial Services because of the use of its FSP number by Livestock Wealth.

There was no FSP number on Livestock Wealth’s website when Moonstone visited it on Wednesday. A Google search brought up links to web-pages with text stating that Livestock Wealth had been approved by the FSCA in October 2021. But when these links were clicked on, the pages either did not exist or did not state that Livestock Wealth was regulated by the FSCA.

A post on Livestock Wealth’s X account on 1 December 2021 announced that it has been approved as an authorised FSP. But an accompanying photo of the FSCA certificate shows that the licensed entity is Livestock Wealth Financial Services.

Livestock Wealth said in its statement that Livestock Wealth Financial Services is wholly owned by Livestock Wealth. “Due to the strength of the Livestock Wealth brand, they both have the same trading name, Livestock Wealth.”

Livestock Wealth said it registered Livestock Wealth Financial Services in 2020 to provide insurance services to its partner farmers. “We also wanted to set up a cell captive, an insured kitty, that would insure the farmer should there be a disturbance in their operations while not affecting the customer’s expectation of a timely return.”

The FSCA emphasised that the investigations have not been completed, and it has made no findings to date.

The Authority said it will update the public at the conclusion of the investigation of any administrative sanctions it may consider imposing against the relevant parties.

A search on the National Credit Regulator’s website confirms that Livestock Wealth is a registered credit provider (NCRCP 8126), as is stated on the company’s website.

Investments in agricultural assets

Livestock Wealth, which describes itself as a “crowd-farming” platform, facilitates direct investments in farmland, livestock, organic vegetable gardens, and macadamia trees.

The basis on which investors earn returns differs depending on the nature of the asset.

For example, investors can invest in a free-range ox for R11 529 for a six-month term. During this time, the farmer takes care of the ox until it is ready for sale. The farmer buys the ox back from the investor at a higher value, earning the investor a minimum profit of R576 and a maximum profit of R807, depending on the average weight and beef price, according to Livestock Wealth’s website.

Its Farmland Ownership asset offers 4 121 portions of a 577-hectare farm in Musina that has 92 hectares of planted citrus. Each portion, which sells for R5 000, equates to one share, and investors can buy as many portions as are available. The minimum holding period is five years.

Livestock Wealth manages the farm, with the aim of growing its value, the company’s website says. The annual rental profit earned by landowners will be based on the farm’s profitability. The targeted profit is 9% a year.

“If the value of the land increases such that it makes sense to sell, owners can earn a higher payout from the sale.”

The fees for this investment are a once-off acquisition fee of 3%, an annual management fee of 2% of net asset value, and a performance fee of 50% of the return that exceeds the target.

According to the website, since 2015, Livestock Wealth has gained more than 2 800 unique investors, who have invested more than R70 million and have been paid out over R10m in profits.

Livestock Wealth was developed by KwaZulu-Natal-born electro-mechanical engineer Ntuthuko Shezi.

In September 2022, the Mineworkers Investment Company’s Khulisani Ventures announced it had invested R10m in Livestock Wealth.