Who is a wholesale investor?

As a result of recent overhauls in the banking and financial services sector, some investments can only be offered to wholesale or sophisticated investors. These tend to be more complex or riskier investments.

Wholesale investors are generally more experienced with financial products and therefore not considered to be in need of the protections put in place for retail investors.  According to the Corporations Act 2001, a wholesale investor is someone who passes one of the following tests:

Sophisticated investor

You are a sophisticated investor if you are an entity that makes an investment of at least $500,000 or more in an investment fund or (if less than $500,000 in an investment fund) have either a gross income of more than $250,000 for each of the past two financial years or control gross assets of $10 million or more.

Professional investor

You are a professional investor if you have an Australian Financial Licence or have net assets of $2.5 million or more.

Experienced investor

You are an experienced investor if the AFSL licensee making the offer is satisfied, on reasonable grounds, that the investor has previous experience that allows them to make assessments on the merits of the offer, the value of the securities, the risks involved in accepting the offer, their own information needs, and the adequacy of the information given by the person making the offer.