Investment guidelines

Under normal circumstances, the Co-operative will aim to invest substantially all of its assets in Australian based investments. Pending investment or re-investment, the Co-operative may hold cash on deposit or invest on a temporary basis in a range of high-quality debt securities and cash equivalent instruments.




The Co-operative’s mandate is to invest in profitable Australian building industry focused businesses as well as property development companies. When making investment decisions, we focus on following fundamentals of the projects or companies: financial performance, operational execution, management and deliverable growth.

We aim to construct a balanced portfolio, selecting from a wide range of investments. When assessing individual opportunities, we focus on the following characteristics:

  • Strong management team
  • Stable or growing markets
  • Defensible strategic position
  • Proven business models
  • Diverse customer base with limited concentration risk
  • Clear growth opportunities.

Portfolio construction

The Co-operative seeks to add value through management skills as well as capital injections in building industry focused and property industry sector opportunities.

In order to diversify the Co-operative, the Co-operative will:

  • Invest in different projects
  • Purchase businesses at market or below valuations
  • Purchase businesses that are under performing to their potential
  • Lend to projects in various locations

The Co-operative uses bottom-up analysis to select individual investments and employs a conservative approach to credit selection, emphasizing protection of principal and a sufficient security buffer. Investments will be made in different industry sectors and regions, diversified across a range of opportunities.

Investments may be indefinite in the case of acquisitions or for a specific designated term. This term, in the case of property development investment, takes into consideration an independently sourced forecast for any proposed construction period.

  • The intention is to hold an average reserve of 5%-10% cash within the Co-operative for liquidity purposes.
  • Considering the nature of the various revenue streams available to the Co-operative, a diversified investment structure is employed to ensure income is being derived from multiple sources, maturity profiles, and investment sectors.

Sector specific requirements and parameters are in place and adhered to at each stage of the investment process.

The final portfolio strategies reflects a rigorous fundamental approach to portfolio management.


Key criteria for Investments

The Co-operative seeks to add value through management skills as well as capital injections in building industry focused and property industry sector opportunities.

The following key criteria for each investment are:

  • All investments are approved at Executive Management level, after investment committee review.
  • Investment decisions are made by Potentia Co-operatives’ portfolio management staff specializing in structuring, documenting and negotiating commercial and property investments.
  • Investments applications are assessed with a primary focus on the inherent asset value and the ability of the Co-operative to add value.
  • All investment loans require valuation of security assets, not more than six months old at the date of the initial advance.
  • In every case, we appoint a qualified independent Valuer on the basis of their experience with the particular category of asset being assessed.
  • Valuers must hold membership with a professional body together with appropriate professional indemnity insurance.
  • Third party Valuers must be approved by the Co-operative.
  • In relation to construction loan facilities, may require an amount of pre-sales at price levels which support the valuation obtained.
  • For property development loans, the Co-operative will insist that a quantity surveyor is instructed to check and confirm that the cost to complete the project is feasible and incorporates adequate contingency.
  • During the course of the project the Co-operative will require the verification that the quality of construction works are in line with building plans and overall specifications, and that they comply with all building codes and the approvals granted by regulatory bodies.
  • Internal procedures include ongoing monthly audit review of the party that is the subject of investment by the Co-operative.