Kate Hage, an experienced professional with a background in finance, law, and business development, successfully transitioned to the tech industry, becoming the first Australian employee and Business Development Director at Syndex.
In our latest episode of Meet the Co-op Farmers, rural journalist Michael Cavanagh speaks to Kate Hage, Syndex’s Australian country manager. Syndex helps agricultural co-ops enter the digital age with its cloud-based platform providing an investment management portal, a member communications and relations system, and a marketplace offering access to capital and liquidity options.
Melina [00:00:02] Raising finance for any business, whether it be for an upgrade or expansion, can be fraught. It could be argued that for co-operatives, it can be even more taxing. Hello, I’m Melina Morrison, CEO of the Business Council of Co-operatives of Mutuals or BCCM. And this is the latest in our Meet the Co-op Farmers series of podcasts. Traditionally, co-operatives look to their members and their community for financing. However, Michael Kavanagh has taken a look at how they’re looking at other avenues to go down, such as how a company called Syndex works in that field.
Michael [00:00:37] Melina, Syndex is in the area of hi-tech and they’re providing support not just in financing, but also how operations such as co-operatives need to adapt to the changing world of business and the use of hi-tech, even down to such things as hacking and I chatted to Syndex’ Kate Hage.
Kate [00:01:09] So Syndex is a cloud-based technology platform and we provide a host of different solutions for co-operatives and private companies and that includes things like unit registry management for co-operatives, communications and reporting and we do automated dividends or rebates for co-ops and their members and that entire back office management communications function, we really manage it from one sort of platform.
Michael [00:01:39] And specifically for co-ops, which are usually allied with the image of working with farmer groups or farm co-ops, whether it be a dairy co-op or an almond co-op. But you’ve also got the mutuals and it’s growth, what do you do that would be possibly different than the back office service that you provide for, say, a public or private company?
Kate [00:02:03] Well, it’s a good question, Michael. What happened was Syndex got started about eight years ago in New Zealand. Initially, we were actually set up to service basically property companies, property syndicators, which is a big sector in New Zealand. Very quickly thereafter we had a couple of co-operative clients in New Zealand come on board and we adapted what we provided to the co-op sector and since then we’ve done it even more so for Australian co-operatives. So what we’ve done is basically tailor our platform offering to the co-op sector in the sense of the way we calculate and pay rebates to members, the way we manage unit registry on behalf of co-operatives. We do things like ATO tax reporting for some of our clients. We manage reporting, so co-operatives just like any other company have performance type reporting that they provide to their board and sometimes to members. And we also provide things like a member log-in and portal where members can come in and have a look at their overall position in the co-operative, what the current value of their units is and find all their past communications from that co-op and between the two.
Michael [00:03:17] Coming out of New Zealand, a long tradition in co-ops, particularly in the dairy sector and overall in the primary production area, is it just been a matter of transferring what syndicate has been doing for the Kiwis to Australian co-ops and mutuals?
Kate [00:03:35] No, so Michael, each co-op is quite unique. So I suppose the Australian regime is similar to New Zealand. So we’ve been able to take what our core offering was, but then we’ve adapted it. So when we worked our initial pilot with BCCM and our first client in the co-operative sector in Australia was Yenda. Yenda is a farmers co-operative, farmers produce and services co-operative in New South Wales and Victoria. So we took our initial kind of overall offering, which is communications, reporting, rebates and unit registry management and we enhance that. So we’ve built a number of bespoke features for them, which included things like the ATO reporting. They have, for example, members that come in, use their stores and buy a whole host of different farming produce and more. And we basically got that what they call point of sale data, which is the sales data that comes out of their stores. And we created a whole bespoke functionality for them, which basically takes the sales data and transfers that into what that means for individual members unit holdings.
Michael [00:04:48] Now you’re doing it for co-ops and there are also the mutuals, but a lot of mutuals have got financial background and their financial services. Do you provide therefore the same service or in fact, would you find that a lot of what you offer are not required by mutuals?
Kate [00:05:06] Well, it’s a good question, Michael, but we actually at this point don’t have any mutual clients. We’d certainly like to and I think that there’s probably a lot of crossover. We could certainly take what we offer to either the co-operatives we work with currently and or, you know, very large clients like fund managers and apply that equally to the mutual sector, I think there is really what we’ve got the core capability in our technology, in what we provide. So it’s just a matter of kind of tailoring it accordingly.
Michael [00:05:41] Now, you talked about coming out of New Zealand and massive dairy co-op like Fonterra, and then we’ve got large and usually dairy and meat co-ops in Australia, such things as Norco and Casino, big primary production co-ops. And then there are the smaller ones that are emerging, particularly in the horticultural side. Is it just a matter then of applying what you do for a large one as opposed to a small where there may be only a handful of members and shareholders?
Kate [00:06:19] No, so Michael, it’s a little different, obviously. So we have our core functionality, which is available to all of our clients. But I suppose really it comes down to the client as to how much of that functionality they actually need to use or want to use. So for a smaller, say in your example, horticulture based co-operative with lessened members, they may not pay a rebate for a number of years to their members, so they might not need that rebate functionality until sometime down the track. But it’s good to know that it’s there when they do need to pay a rebate, perhaps 5 to 7 years after getting started. And you know, the unit registry is perhaps basic at the beginning. So really we find in a lot of cases, our biggest competitor is Excel. So a lot of even big co-ops are running off Excel or a derivation thereof. And so we think that having your unit registry on a system like ours from the get go is obviously advisable, works a lot better so that it just takes out a whole lot of manual time and room for manual error, key man risk, etc.. And there’s other functionality that a smaller co-op might not use till they get further into their years of operation, but they’ll certainly use it down the track is what we found. And you’re mentioning our shareholders that can log in. They can have a look at how the operation is going. So it would show basically what a real time balance sheet.
Kate [00:07:54] Yes, it is very much like a real time balance sheet. So for you, for a shareholder of say for example, we’ve got clients that are fund managers, as a shareholder or a fund manager, you can log in and see what your current position is in. You might be invested in several different funds of this fund manager in a co-op usually just have the one position number of units held in one entity. Having said that, we actually have co-ops that have members that hold their units in several different entities, and when I say entities, it could be that they hold, you know, 20% of their units in a self-managed super fund and they might hold another 30% in a trust, family trust. And then the remainder in a private company, for example, the platform is set up to cater to all of that.
Michael [00:08:41] And so therefore does it allow let’s just use a dairy co-op, for example, I’ve got their shares and dairy is an industry where you are starting to get some young people coming into it. But there is also a large group of older dairy farmers with their shares. Does it allow, if not share trading? Does it make it easier for one shareholder to possibly either sell or in fact want to purchase more?
Kate [00:09:16] Absolutely it does both of those so what Syndex provides is obviously what I’ve talked to most is our core offering around the sort of reporting communications rebate functionality and unit registry. But we also have, to your point, functionality that’s built around a secondary market. And when I say secondary market, that’s exactly to the question, which allows your existing members to trade amongst themselves. So it’s a closed marketplace. So you have members who might be retiring or perhaps they’ve sold the farm, etc. they just want to or they might want to transfer their units from their own self-managed super fund or trust to family members. And that secondary market allows for all of that in a really seamless and automatically updated fashion.
Michael [00:10:30] That’d be attractive in some ways to very much the traditional co-ops, because there’s always that fear of the ownership going outside, whether they be dairy farmers or macadamia farmers. And therefore there’s that danger of someone coming in purely to buy and trade and lose that clear identity with the community.
Kate [00:10:55] Yes, I think you’re right, Michael, it is useful. We have had some good feedback about that because it, I think, it’s a strong function for retaining ownership, you know, retention of members and seeing that the you know that history of the co-operative is passed down.
Michael [00:11:13] It does beg the question or it does I’ve always got this great image of particularly the centuries old co-ops that may have started with eight dairy farmers coming together or beef producers. The back office, as you say, is you look at the bookshelves behind the bookkeeper and there are shoeboxes and there are receipts and things like that. And then when that generation moves on, they take a lot of what is actually intellectual property. They don’t steal or anything, it just goes out the door when they leave. Does this counter that problem?
Kate [00:11:48] Absolutely that’s one of our biggest selling points, I have to say. And when we met with Yenda, which was our first co-operative we worked with through the BCCM pilot program, the trigger point for Yenda, which is a very large co-operative with members, they had really one person in the business who had been in charge of all of their, you could say IT, but also member management back office for many, many years and he was due to retire. And so when we did discovery session with them in the very beginning, we said, what kind of problems are you looking to solve for in your business? And they sort of set that out and saying, well, we have one person who understands this bespoke kind of IT function that he built maybe 20 years ago. So automatically I know that they’re dealing with all the technology and then the head key man risk because that person was going to retire and inevitably take a lot of that knowledge with them, even though of course they wouldn’t want to do that. But it’s just the way those things work, especially when they’ve built or been part of building that older technology that’s still in place.
Michael [00:13:02] So to make sure that there’s always the problem whenever you move into more sophisticated technology, it does boil down to the information that’s been fed into the system. Do you still leave that up to the bookkeeper that’s been with the horticulture co-op for 20 years, or do you just hand them over program that does it for them?
Kate [00:13:25] No, so generally our offering is basically to take all of your existing information, your data, a lot of that is obviously member-specific data and to do a project where we cleanse the data. And when I say cleanse it, it’s also looking at what’s missing in terms of member information that might not be there. And often that is the case that there are a lot of old email addresses, old bank accounts or just old information that no longer is current. And so we go through all of that data. We sort of match the data to our own to Syndex’ own sort of fields and columns and so on. And then we onboard that data ourselves and our team really does that project. In the end, we do have an offering where for some co-operatives that believe their data is in better shape or they want to do the data cleansing themselves of course, that’s an option. But not many clients tend to go for that.
Michael [00:14:23] I’m Michael Kavanagh and this is part of the Meet the Farmer podcast for the Business Council of Co-operatives and Mutuals, or BCCM. Kate Hage is the Country Manager for Syndex Australia. Now, normally, yes, we’d be talking to co-ops themselves or the farmers, but in Kate’s case, it’s more looking at, I suppose, bringing companies up to speed into cyber and the use of technology to just make everything from share trading to bookkeeping, just that more sophisticated and efficient. I mentioned the part of cyber, Kate, and in recent times we’ve heard about cyber security, cyber hacking, these sorts of things. Again, the traditionalists in the co-ops, how much of hacking and cyber security, is there a need for you’re going to say there’s obviously a need because of it’s a business for you. But what does it actually bring, you know, the Norcos of the world or almond co’s or the beef co-ops.
Kate [00:15:33] It’s a great question, Michael, so I think, first of all, cyber security needs to be front of mind for any company, any co-operative in the world today, not just in Australia, anywhere. And I think the obvious reason for that is what we saw happened last year with companies like Medibank and Optus and Woolworths and so on, where you saw just enormous value wiped out from those companies in a matter of hours. For those that are publicly listed, but you know really what it is, it’s a complete erosion of trust for the clients of those companies where you’ve had personal information basically hacked. And I think that what’s happened as of right off the back of that is there are changes that are imminent in the privacy laws in Australia. So that legislation is coming right on the forefront. We’re on the forefront of that legislative change right now. And what that means is that it’s going to be far more onerous for companies, how they collect their client information and collate that client information and how securities when they hold that information. So, you know, I read a quote last year when everything was happening with the Medibank hack and it was a quote I think that came potentially from one of the ministers at the time, it was someone closely involved in one of these cases. And it basically said that client data was once gold and is now considered to be like asbestos or can be. So that is the case in our minds for having a very secure cloud-based technology platform that manages your client information. Look, we’ve always been across it and we’ve been providing this service for over eight years to co-operatives and private companies. But I think that if you weren’t aware of it before, then certainly, you know, at the end of last year with all of those cyber attacks and then this year with what’s happening with the change in legislation, you certainly should be now. I think on top of that, what we’re looking at is a total change to the onus on directors of boards, and that applies equally to co-operatives. So you have liability, you know, personal liability that applies if you don’t have a secure system in place and you haven’t reported to the board adequately and have policies and procedures around cyber security.
Michael [00:17:59] Kate, we’ve looked at the larger co-ops, whether it be beef and dairy, and we’ve mentioned the growth in horticulture that’s still quite a niche area. Is there a naivete that you’ve got to deal with, even with large co-ops, with individual owners not really understanding cyber security?
Kate [00:18:22] Yes, Michael I think that’s right. I think any company today, as I said earlier, is really at risk from a cyber security point of view. And because of the changes to privacy legislation in Australia, you know, everyone really needs to be adhering to that much, much higher onus in how you collect, collate and store client information, whether you’re a small business, a small co-op or very large one. Equally, it applies to all and, you know, the increasing number of cyber threats that you say really means that it’s an actual absolutely imperative to have your client data stored on a secure cloud-based platform, whatever it is, it really is something that, you know, you can’t avoid doing in today’s environment.
Michael [00:19:11] The other thing that strikes me is co-ops, whether it be large or small, really much prefer for any financing, any capital raising to be done within. Now with Syndex and the fact that they can see how the operation is travelling financially almost in real time, does that make it easier or harder for a cop that wants to raise finance, you know, whether it be for expansion or just upgrading, where the Syndex fall into that sort of area?
Kate [00:19:49] Well, Michael, what we offer is bespoke capital raising, and we do that for all of our clients, whether it is for, you know, as we said earlier, we work with fund managers and private businesses, but we also offer for co-operatives. So we have a couple of ways we raise capital. In New Zealand, we have what we call a primary markets platform, which we raise capital through Syndex subscribers that are high net worth individuals. And you know, in Australia what we would do is through the use of co-operative capital units, CCUs, we would go to the broader market and basically depending on the size of the capital raise, try to do that through our private networks, working with our capital raise partners. So it really depends on the size of the capital raise. But there are, suffice to say, increasing numbers of interested investors in getting into what we call impact investment. So impact investment can really fall into co-operative space depending on what sector it’s in and depending on what the co-operative actually does.
Michael [00:20:55] Kate Hage is my guest on Meet the Farmer podcast with the Business Council of Co-operatives and Mutuals, or BCCM. And I’m Michael Kavanagh and Kate is the Australian Country Manager of Syndex. Kate, we’ve talked about capital and capital raising and if you do have to go out into the market for financing for a co-op, some projects, particularly in the area of primary production or we’re seeing the growth of wind farms for example, they’re a really long-term investment, a long time before anyone’s going to get a return. Farmers can be a little bit patient there, but if you’re raising capital and you’ve got someone coming in from outside and you’ve got to point out that this is going to be very much long-term, again, what would Syndex role be there?
Kate [00:21:53] So a good question, Michael, so, you know, the role in capital raising is it’s really incumbent on the party that’s doing the capital raise to match appropriately, match the capital to the investment and the group that’s raising the capital. And in the case that you raise of, say, a co-operative that is in the ag space, primary production and or building wind farms, alternative energy and so on that would be something we would work with the co-operative on and we would do a capital raise working with our corporate advisory and capital raise partners. We would go to the private network and in my mind, because you’re looking for patient capital with both ag and with those alternative energy projects, you would look for an investment partner that potentially has an interest, well obviously has an interest in those underlying sort of sectors and thematics around agriculture and or farming production and also alternative energy, if that’s the project you’re rising for. Some of those could be endowment funds that could be either in the insurance sector; they could be private sort of family office groups. They are really groups that would in some of those cases, they might be interesting and have a mandate in what we call impact investing, which is really deploying money into an area that they know they care about. And it’s part of that endowment fund, for example. So if that’s the case, that’s really our job to do the capital raise, to go out and find the appropriate investment partner that’s in it for the long term, that does have the kind of the capacity to put that money to work for, as you say, it might be seven or eight year period or even longer, and to wait for that return. And that might be a very, very different type of investor than you would get ordinarily through other channels.
Michael [00:23:47] Co-ops seem to be enjoying a bit of a resurgence. Partly the view is possibly because of COVID. Shop locally, those sort of issues that are driving them. And then co-ops would have its shareholders where they have to spend so much or that many times per fiscal year. Are you finding that there are investors showing interest in co-ops looking for co-ops? Possibly need some finance, and the way they’re structured enables that finance to come in from outside.
Kate [00:24:22] Yes, I think that’s right, Michael so there’s a much greater appreciation of co-operatives in the sense that the founding principle of co-operatives is often very closely aligned with what we call the ESG sector, which stands for environmental, social governance and ESG or environmental social governance investing has had a huge resurgence or growth in the last ten years. So you’re seeing an increasing number of what we call institutional, sophisticated investors wanting to invest in that way. And right on the forefront of that is, for example, is your large super funds in Australia that have got ESG mandates or they’re entirely ESG. So, you know, examples might be Aware Super, Australian Ethical and so on. and so there’s a greater interest from groups like these so at the smaller end like a family office or an endowment fund to want to invest along those kind of ESG principles. And so there is greater interest, I think, and it definitely depends on the individual co-op and what they’re involved in, what their primary activity is. But certainly where we see co-operatives that are in, for example, community energy, alternative energy, there’s much greater interest in getting involved in that sector and equally in co-operative farming.
Michael [00:25:45] We’ve seen a growth, as you say, like the wind farms and the way that wind farm operators have come in collectively to smaller communities and working with both. And the ones that have been successful have worked well with the farmers where they’re going to be using the property themselves and then also bringing the community itself in. At the times when you’ve actually got to educate the co-ops along the lines of saying, look, if you want to raise some more funds, you are probably and we can find you an investor that is interested, but they want a certain environmental, social governance yardstick as well.
Kate [00:26:28] There’s a big role for us to play there. And I think probably increasingly together with BCCM as well around education, education for co-operatives and basically being able to ensure that the way that they’re deploying that capital, putting that capital to use is in alignment with that that underlying investor. So you might get an investor comes along and they might be, you know, again, a family office or an endowment fund but they’re very sophisticated, you know, the way they are set up. They have very stringent reporting requirements. They have very sophisticated ways around basically deploying the capital. You know, there’s a whole host of different things you have to adhere to. And so we see our role very much around the education space and working very closely with the co-operatives that go down that path.
Michael [00:27:17] There would be times you’re juggling because you’ve got the traditional shareholders, the actual farmers whose families been involved in that co-op for multi generations. Then you’ve got such things as fund managers and investors. They’ve got different aims, haven’t they?
Kate [00:27:36] They do but again, that’s the whole key, I think, in matching the capital and that’s the role for us to play. So it’s really an education at both ends to ensure that you’re bringing the right party to the table to sort of invest in that underlying project and the co-operative that is getting involved in that. So usually if you’re dealing with, for example, a traditional fund manager, obviously their objective is very much around returns and yield. And yet what we’re talking about more and more is going to, you know, private investors that are sophisticated like a fund manager, but they might have different ‘return objectives’. And when I say that, I mean, you know, that there are objectives that are more closely sort of, you know, rather than just yield and percentage in terms of their return on capital what they’re actually looking for is more community-based. They’re looking for, you know, sort of things that they can report back to their board on how they’ve been involved in the community environment gains, for example, in carbon, for example, carbon farming initiatives. And so there’s a whole host of different things that are not just financial so it’s called the triple bottom line and in terms of the way that they invest and what they’re looking for these days.
Michael [00:28:59] Do you also find sometimes you’ve got a co-op that comes to you and says, look, we’ve got to raise some capital. This is the background of our co-op itself. And then you go to a fund manager and say, oh, by the way, have you thought about a co-op? And they suddenly go, no, we haven’t and hadn’t even considered the returns that would be possible.
Kate [00:29:22] Yes, you definitely I mean, co-operatives are, I think, a relatively misunderstood sector. More broadly, I think particularly in financial services, sectors and circles. You probably don’t have all that many individuals who’ve been involved in co-operatives, either directly through families, etc.. Our experience has been quite little understanding of how co-operatives actually function in terms of the value, the value of being a member, which isn’t just a financial value. And so to, you know, there is that big education piece as well around understanding for an end investor that there is just this, you know, community build. There’s an enormous value from being a co-operative and a co-operative member in terms of agricultural communities and what they give back.
Michael [00:30:19] And would fund managers also see a benefit? We’ve seen the growth in paddock to plate and there’d be the fund managers that would like to turn around and say, oh, by the way, we’re involved with a dairy co-op or horticulture co-op, or it’s still just comes down to the bottom line and making sure it’s in the black and not in the red.
Kate [00:30:40] Look, I think it’s changing. Michael, I think, had you asked me that question five years ago, I would have said and I came out of a financial service background, I would have said it’s far more about yield and what’s the return on investment? And I think now what you have is much greater awareness that through wholesale investing, through being an active member of your superannuation fund, etc., that you can actually do good at the same time as generating a return for your super fund members, for example. So we’re seeing a real change in the broader industry. And I think a lot of the positive changes that are happening in private sector, but also, you know, for some of the largest public companies in Australia and globally that pressure is coming from far more where investors and their underlying shareholders to say, you know, we expect there to be an ESG element in what you do if not in everything you do.
Michael [00:31:44] Equally, is there sometimes the nervousness amongst co-ops, particularly ones that have got over 100 years in operation, where they look at the investors with a bit of a wary eye because they’re coming in from a non-primary production background?
Kate [00:32:00] That’s definitely the case, yes, I don’t think there’s generally in between co-operatives and fund managers and wholesale investors, an enormous alignment of interest traditionally. So I think that’s a real role that Syndex and our investment partners and BCCM are hoping to play more and more is to build the education, to build the awareness and to try to bridge that gap more and more because what we are seeing at an overarching level, as I said in the funds management space, in superannuation, family offices, etc., is a much, much greater push for doing good with your capital, doing good with money and putting it into sectors and areas that are actually generating a return that’s not just a financial return. So that’s where we see this kind of exciting opportunity for that, helping to bring some of that institutional money into the co-operative sector, which has been built on those principles forever that’s really been the genesis and the DNA of the co-operative sector.
Michael [00:33:15] Kate Hage has been my guest today. She’s the Australian Country Manager for Syndex and this has been part of the Meet the Farmer podcast with the Business Council of Co-operatives and Mutuals, or BCCM. Kate, thanks very much for your time.
Kate [00:33:31] Thanks, Michael, thanks for having us.
Melina [00:33:36] Syndex’ Kate Hage with Michael Kavanagh in the latest episode of BCCM’s Meet the Co-op Farmer Podcast series. I hope you enjoyed this latest episode of Meet the Co-op Farmers. If you’d like to know anything about setting up or running a successful agricultural co-operative, you can find out everything you need to know at the co-op farming website that’s www.coopfarming.coop that’s right, coop for co-operative. Please share this with your mates. If you enjoyed this story, we really do want to get the great stories of farming co-operation out there. And remember, in a troubled world, with all of the challenges but also the opportunities we have, we really are better together. I’m Melina Morrison and I look forward to seeing you on the next episode of Meet the Co-op Farmers.
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