Foreign investment in Aotearoa/New Zealand

Overseas Investment Office – September 2017 Decisions

Craigmore Buys Te Puke Kiwifruit Orchard

Craigmore Permanent Crop Ltd Partnership (Germany 30.5%; Hong Kong (SAR) 24.5%; Switzerland 15.23; UK 13.7%; Finland 9.1%; USA 4%; NZ 3%) has consent to acquire 17.6 hectares at 870 Te Mata Road, Te Puke, from Robert William Thode and Olesen Trustees (2011) Ltd as trustees of the Robert Thode Family Trust (NZ 100%). Price was $4.5 million.

The OIO states that Craigmore Permanent Crop is a horticulture investment vehicle that is part of the Craigmore Farming Group. The land is currently a kiwifruit orchard growing a combination of Hayward and Kiwiberry kiwifruit. Craigmore intends to improve orchard production and export returns by grafting new G3 kiwifruit vines, converting part of the orchard to organic G3 kiwifruit production, and upgrading infrastructure

The reported benefits to New Zealand include creating additional direct and indirect jobs tending, picking, and packing kiwifruit; increasing kiwifruit production; increasing export receipts; and capital investment for grafting existing vines to G3 kiwifruit and converting part of the orchard to organic G3 kiwifruit production.

For more on Craigmore Farming, its ownership history and recent acquisitions, see OIO Decisions for June 2012, February 2013, March 2013, November 2013, December 2013, March 2014, April 2014, May 2014, June 2014, July 2014, August 2014, November 2014, June 2015, July 2015, September 2015, May 2017 and August 2017.

US Ownership of Canterbury Vineyards

Aotearoa NZ Fine Wine Estates LP Adria Marie Sheth, USA 50% and Brian Niranjan Sheth, USA 50%) have consent to acquire 80.7 hectares at 548 Pyramid Valley Road, Waikari, North Canterbury from Pyramid Valley Vineyards Ltd (Claudia Elze Weersing, NZ 49%; JRW Technology Inc., USA 44%), Mary Helen Weersing, USA 5%, Michael Scott Weersing, NZ 2%) for $8 million.

The OIO states that the land currently operates as a vineyard. Aotearoa NZ Fine Wine Estates (ANZFWE) is a newly established limited partnership that intends to increase the size of the vineyard and construct new wine-making and visitor wine-tasting facilities. The stated benefits to New Zealand include increasing the volume and value of exports; enhancing land productivity; introducing additional capital for developing the vineyard and constructing new wine-making and visitor wine-tasting facilities; increasing the amount of grapes processed in New Zealand; and creating a new salaried full-time equivalent position and, in the short term, a number of contractor positions.

The Drinks Business (16/8/17) reports that Aotearoa NZ Fine Wines is a new venture between Brian Sheth of US based Sangreal Wines LLCfrom Austin Texas, and Steve Smith of LandbaseWineNZ Ltd who developed the Craggy Range brand in Hawkes Bay and Martinborough along with owner Terry Peabody. Pyramid Valley Vineyards, along with Lowburn Ferry Wines in Central Otago, are its first purchases. Pyramid Valley Wines is described as a frontrunner in New Zealand’s growing biodynamic movement.

ANZFWE has also secured a small piece of land in the Gimblett Gravels wine growing district in Hawke’s Bay. ANZFWE’s Chief Executive will be Michael Henley, for five years CEO of Hawke’s Bay winery Trinity Hill (https://www.thedrinksbusiness.com/2017/08/two-nz-wineries-sold-to-new-fine-wine-company) . Brian Seth is the President and co-founder of Equity Partners, managing $US30 billion in equity capital.

Brian and Adria Seth are founders of Sangreal Foundation, which focuses on conservation and children’s education (www.sangrealfoundation.org. Brian Seth is also chair of Global Wildlife Conservation (www.globalwildlife.org . See OIO Decision for September 1999 when the property was bought by the Weersings for conversion from sheep and cattle to wine.

Tahitian Brewer To Intensify Deer Farming In Motueka

Church Street Trustee Ltd (Jean-Pierre Fourcade, French Polynesia 100%) has consent to acquire approx. 769 hectares at 545 Waiwhero Road, near Motueka, from Paratiho Ltd Sabine Marita Whitson, UK 50%, Keith Roderick Whitson, UK 50%). Price was $18 million.

The OIO states that Church Street Trustee is a citizen of France and a resident of French Polynesia who is buying Paratiho estate as a lifestyle property and working farm. Sheep, cattle and deer are currently bred and fattened on the farm. The applicant plans to undertake a capital fertiliser programme on the farm, with the goal of significantly increasing stock numbers, particularly of deer.

He also plans to establish a new vineyard on the property. It is stated that this is likely to create at least three new full time equivalent jobs. Thirteen acres of the forest, tree land and wetland are identified as having high ecological value will be protected. Five blocks will be put under Queen Elizabeth II National Trust covenants. Two new access strips will be established in consultation with the NZ Walking Access Commission.

The property includes a former luxury lodge, which former HSBC banker Keith Whitson and wife used as their home, as will Fourcade. See OIO Decisions for September 2009 for the Whitsons’ consent. Fourcade is President of family business la Brasserie de Tahiti, which produces Coca-Cola, Fanta, Powerade, Schweppes, Jim Beam, and Courvoisier under licence, as well as beer. He is also Tahiti’s Honorary Consul for Finland and a director of Air Tahiti Nui. Church Street Trustee Ltd was incorporated on 22 July 2008, became a Registered NZ Limited Company on 28 June 2016, and appears to have a mention in the 2015 Paradise Papers, https://offshoreleaks.icij.org/nodes/12153928.

Asian Fund Merges With Poultry Investors

Dragline Ltd various overseas 44.5%, various NZ approx. 25%, US Public 19.8%, UK Public 10.7%) has consent to acquire 100% of the shares in Mainland Poultry Ltd which has a freehold or leasehold interest in approx. 635 hectares at 17 locations throughout New Zealand; and significant business assets for a consideration exceeding $100m. Price was $258 million.

The vendors are Poultry Equity No2 Ltd, Bay Trustees Ltd, Mainland Poultry Equity Ltd, Aileen Winmill, Jeffrey Ian Winmill and Barbara Louise Gibson (Michael Bruce Guthrie and Susan Jane Leckie, NZ; Roger Norman Macassey, Barbara Hirji Valentine and Murray Graham Valentine, NZ; Jeffrey Ian Winmill, Aileen Winmill, Barbara Louise Gibson, NZ; Hamish James Sutherland and Christine Denise Sutherland, NZ)

The OIO stated that Dragline has been formed to undertake the investment, and is ultimately owned by private equity fund Asia Fund VII LP and the vendors. Mainland Poultry is a large, vertically integrated, egg-producing business that also rears layer hens and produces animal feed. The land at 17 different locations throughout New Zealand is used for egg-laying and chicken farming. Dragline intends to invest in Mainland Poultry to make the transition from conventional cages earlier than required by law and to grow the business. The stated benefits to New Zealand include:

New Zealand oversight and participation in the overseas investment and in Dragline, as the vendors will have an approx. 25% ownership stake in Dragline and its immediate parent company;
a new full-time equivalent senior strategy role that will be created immediately following the overseas investment;
capital expenditure to develop a recently acquired farm in the Waitaki District;
new jobs associated with the above farm; and
previous investments by Navis that have been or are of benefit to New Zealand in the education resources and retail menswear sectors.

A dragline is a type of earth moving equipment; very large ones are used in strip mining. Dragline Ltd doesn’t appear to exist yet. Navis Capital Partners was founded in 1998 to make private equity investments in buyouts, recapitalisations and financial restructurings in Asia, particularly Southeast Asia, Australia and Hong Kong – and now New Zealand.

Navis acquires control of its portfolio companies. Since 1998 it has made over 70 such investments, including in food processing, fast food/casual dining, industrial products, fast moving consumer goods, outdoor advertising, auto rentals, consultancy and professional services. Navis contributes capital and management expertise to direct strategic, operational and financial improvements. It says its investment model places low reliance on leverage (i.e. borrowing) to drive its equity returns (www.naviscapital.com). So, it’s a vehicle for about $US5 billion of the free-floating private equity of the 1%.

It’s unclear what Navis Asia’s previous beneficial investment were in New Zealand; a search for “Navis” gets no other results than the Land Information NZ or CAFCA Websites. Navis is said also to be interested in buying Freshmax, the Australian-registered, NZ-based fruit and vegetable producer (NZ Herald 23.4.17, www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11846098). Mainland Poultry”s businesses include NZ”s largest egg producer, Zealand Gold. It needs to replace equipment to phase out battery cages in favour of larger colony cage systems or free-range production, as required by the Animal Welfare (Layer Hens) Code of Welfare 2012 (NZ Herald Business, 23/4/17).

In November 2017 Mainland Poultry hit the news with shocking footage of one of its poultry farms, Zeagold Foods’ Forest Hill Farm in Northland. Direct Animal Action chose to investigate because Mainland was applying for a permit to build an industrial egg laying farm in the Waikato. Mice were running through cages and decomposing bodies of chickens were floating in dirty water. Mainland was “extremely concerned” and was investigating (NZ Herald 17/11/17, http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=11944845).

Kiwi Property To Develop Town Centre In Drury

Kiwi Property Group Ltd and Kiwi Property Holdings No. 2 Ltd Ltd (NZ 72.2%; USA 13.7%; Australia 4.1%; UK 3.5%; Japan 1.1%; Norway 1.6%; various overseas 3.8%) has consent to acquire 29.8 hectares at 133 Fitzgerald Road, Drury; and 0.8 hectares at 97 Brookfield Road, Drury; and 8.6 hectares of land at 68, 108, and 114 Flanagan Road, Drury, South Auckland, from Annette Mary Flanagan, Michael Anthony Flanagan, and Annette Mary Flanagan as trustee of the estate of Maisie Flanagan (NZ 100%), Annette Mary Flanagan (NZ 100%), and James Holmes and Barbara Noeleen Holmes (NZ 100%), for a price of $36,375,000.

The OIO states that Kiwi Property Group is a New Zealand based property investor and developer. Part of the land is to be used as separate residences with the remainder being a small dairy farm, with other land for stock run off and grazing, and a small cottage. Kiwi Property intends to create a residential property and town centre development in Drury. The stated benefits to New Zealand are creating direct jobs in the town centre construction, creating ongoing indirect jobs in town centre services; additional investment for the development; and creating large and integrated infrastructure, transport, retail, and community services in Drury.

Kiwi Property is the largest property company on the NZ Stock Exchange, listed in 1993, and a member of the NZX15 Index. It owns and manages a $3billion portfolio of real estate, comprising mostly shopping centres and office buildings. Kiwi Income Property Trust was created by Richard Didsbury and Ross Green as a property investment vehicle with a Trust structure that was changed to a company structure in 2014. Currently mainly NZ owned, Kiwi Property has had past part ownership arrangements with FCMI Financial Corporation of Canada, Australian property group Lend Lease and the Commonwealth Bank of Australia.

See March 2017 for an OIO consent related to a merger with NZ based property investment company NPT that didn’t go ahead. In its most recent bond issue (seven years at 4%) Kiwi Property raised $125 million (NBR, 23/8/16, www.nbr.co.nz/article/kiwi-property-raises-125mn-paying-400-over-7-years-b-193693). Search “Kiwi Property” in the CAFCA Website’s search engine (http://canterbury.cyberplace.co.nz/community/CAFCA/search-cafca.htm) for several pages of OIO consents re its property investments.

Fletchers Land Swap For Three Kings Housing

Fletcher Residential Ltd (various overseas 34.3%; Australian Public 24.1%, NZ Public 22.2%, North American Public 19.4%) has consent to acquire 1.7582 hectares of reserve land at Three Kings, Auckland from the Auckland Council (NZ 100%) in a land exchange. The OIO states that Fletcher Residential is a specialist home-building company with a long and established history of residential housing development in New Zealand. The land is reserve land administered by the Auckland Council. Fletchers owns a disused quarry next to it, and intends to develop both as an integrated residential housing development, with approx. 1,200 new dwellings and two sports fields.

Fletchers Residential has entered into a land exchange agreement with the Council to develop and upgrade significant portions of the Council’s existing reserve land and divesting 2.6 hectares of its own land to the Auckland Council as a new reserve. The stated benefits to New Zealand include creating additional direct and indirect jobs in the proposed development, and benefiting the Auckland region by helping meet growing demand for housing in areas with supporting infrastructure, amenities and facilities

This land swap is part of a controversial $1.2 billion development by Auckland City Council for high-rise apartments at Three Kings (actually one-and-a-half Kings after historic quarrying of the volcanic cones by Winstones). It was opposed in 2016 by the local community board and community action groups, on environmental grounds, because it was not needed and because there were better options (Scoop, 5/4/16, http://www.scoop.co.nz/stories/AK1604/S00070/three-kings-land-swap-and-apartment-towers-not-needed.htm). Also, because Fletchers’ work so far “looks like a prison” (NZ Herald, 26/8/16, http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11700563).

The project was slowed by an appeal to the Environment Court which ruled on 13 issues, including land contouring, protection of volcanic features, building form issues and minimum dwelling sizes that Fletchers had to address (Stuff, 3/8/16, https://www.stuff.co.nz/business/82823959/Fletchers-Three-Kings-Quarry-plans-hit-a-speed-bump). The Three Kings contract was part of a construction boom in Auckland and Christchurch that, in March 2017, led stock market speculation to get way ahead of Fletchers’ actual profits, leading them to put a temporary halt on trading (NZ Herald, 17/3/17, http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11820195).

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