Foreign investment in Aotearoa/New Zealand

Overseas Investment Office – December 2017 Decisions

On 14 December 2017, an Overseas Investment Amendment Bill (www.parliament.nz/en/pb/bills-and-laws/bills-proposed-laws/document/BILL_75755/overseas-investment-amendment-bill) was introduced in Parliament. This Bill will amend the Overseas Investment Act 2005 to ensure that investments made by overseas persons in New Zealand will have genuine benefits for the country. Meantime, the OIO is working under a new Directive (see above, November Decisions, for Web link address) from the Government. In the December month, there was a flurry of consents, two applications declined and one blocked by the Commerce Commission.

No Consent For Bathurst To Buy Sullivan Mine

Bathurst Coal Ltd (Singapore Public 30.7%; NZ Public 22.1%; Republic Investment Management Pte Ltd, Singapore 19.9%; Australian Public 19%; Asian Dragon Acquisitions Limited, Singapore 7.3%; various overseas 1%) has been declined consent to acquire a freehold interest in 18.9602 hectares at Sullivan Mine, Denniston Plateau, West Coast, from Solid Energy NZ Ltd (NZ Govt 100%). Price is $450,000.

The OIO states that the Sullivan Mine has been closed since 1995. Bathurst wanted the land and associated coal mining licenses to support Bathurst’s adjacent operations and the future viability of the Buller coal project. Bathurst had no firm plans to reopen the Sullivan Mine and said it would consider doing so when the price of metallurgical coal rises to a more favorable level.

For consent to be granted, the Ministers responsible needed to be satisfied that the acquisition of Sullivan Mine would result in substantial and identifiable benefits to New Zealand. Given that it was closed and uncertainty to re-open, the Ministers were not satisfied that the benefits to New Zealand of this investment were likely to be substantial. The application was declined.

The decision was made by Land Information Minister Eugenie Sage and Associate Finance Minister David Clark, against officials’ advice. Sage said the deal failed to provide a convincing case for economic benefit or job creation, given the ongoing volatility of coal prices; Bathurst itself had suspended operations at the Escarpment Mine, also on the Denniston Plateau. Solid Energy’s creditors will get at least 60 cents in the dollar when the failed State-owned enterprise’s mines are all sold, up from the previous 45-55 cents (Scoop, 7/1/18, http://www.scoop.co.nz/stories/BU1802/S00141/sage-says-sullivan-mine-didnt-meet-economic-benefit-test.htm).

No Consent For ANZ Sale Of UDC Finance To China

TIP-HNA New Zealand Holdings Ltd (China Public 25.1%; Hainan Cihang Charity Foundation, PR China 26.9%; Hainan Province Cihang Foundation, PR China 20.7%; Feng Chen, PR China 13.7%; Jian Wang, PR China 13.7%) has consent to acquire 100% ownership and control of UDC Finance Ltd, acquiring property used in carrying on business in New Zealand, from ANZ Bank NZ Ltd (Australian Public 91.7%; NZ Public 4.3%; various overseas 4%), for $660 million.

The OIO states that TIP-HNA wished to acquire up to 100% of the fully paid ordinary shares in UDC Finance Ltd, a wholly-owned subsidiary of ANZ Bank New Zealand Ltd. The OIO could not determine who the relevant overseas person was from the information provided about ownership and control interests. And therefore, the OIO could not apply the test in section 18 in the Overseas Investment Act to determine whether that person is of good character. The application was declined.

An email attributed to HNA expressed disappointment and said: “The current political environment in NZ relative to foreign investment will play a significant role in our determination of next steps”. The proposed sale price was 1.6 times UDC’s net assets. HNA, a sprawling conglomerate built up by founder Chen Feng from a small regional airline in Hainan, has attracted increasing attention for its heavy debt load used to fund acquisitions (Hunter, NBR, 21/12/17. www.nbr.co.nz/article/660m-udc-sale-scotched-oio-th-211442).

When it was announced that this application had been declined, CAFCA put out a press release asking what would have happened if the OIO had been able to apply the good character test, and pointing out that the OIO’s record is far from reassuring (“Overseas Investment Office Needs To Pull Finger On ‘Not Of Good Character’ Complaints”, 27/12/17, http://canterbury.cyberplace.co.nz/community/CAFCA/press-statements/oio-needs-to-pull-finger.html. Ed.

OfficeMax Takeover Blocked By Commerce Commission

Project Inkquill II Pty Ltd (North American Public 36.2%; European Public 14%; Netherlands Public 11.9%; Asian Public 10.7%; Platinum Quill Principals International [Cayman] LLC, Various 7%; Saudi Arabian Public 6.8%, Switzerland Public 6.6%; Middle Eastern Public 4.4%; South American Public 2.418%) has consent to acquire 100% shares in OfficeMax Holdings Ltd and its subsidiaries from OM Luxembourg Holdings S.a.r.l (US Public 97.4%; various overseas 2.2%; Canadian Public 0.4%) for $242,332,000.

TThe OIO states that this is part of an international takeover transaction. Project Inkquill is wholly owned by widely held investment funds controlled by Platinum Equity LLC. The applicant has satisfied the OIO that the individuals who will control the investment have the relevant business experience and acumen and are of good character and has demonstrated financial commitment to the investment.

OfficeMax is an office supplies retailer targeting business, Government, education and home offices, and has 16 stores in NZ. Office Max Holdings Ltd was registered here in 2000 and was known until 2005 as Boise Cascade Office Products (NZ) Ltd, a US forestry company – see OIO August 2000 for Boise Cascade’s consent to acquire Croxley Stationery, which was closed in 2014 with 100 jobs lost.

OfficeMax began in 1988 in Cleveland, Ohio, and by 2012 had 941 stores in 47 states, Puerto Rico, US Virgin Islands and Mexico. In 2013 it merged with Florida-based Office Depot, creating the largest US office supplies chain (see OIO November 2013) and gaining European business. In 2015 the Federal Trade Commission blocked a further merger with rival retailer Staples (Wikipedia). It then sold the European business of its International Division (and remaining international operations in South Korea, China, Australia and New Zealand were being marketed for sale, said its 2016 annual report).

In November 2017 the Australian Competition and Consumer Commission said it would not block the acquisition of OfficeMax Australia by Platinum Equity. Platinum Equity owns Winc (formerly Staples Australia); both Winc and OfficeMax supply office products in Australia (The Recycler, 30/11/17, www.therecycler.com/posts/accc-will-not-block-officemax-acquisition) and New Zealand. So that’s the international takeover transaction that the OIO refers to, which includes OfficeMax’s 16 stores in NZ

But on 2 November 2017 NZ’s Commerce Commission filed an injunction in the High Court to prevent Platinum Equity from acquiring OfficeMax Holdings. The Commission said it would substantially lessen competition in stationery supplies to large and Government customers. It had given approval in 2015 (see commentary for November 2015), but that had lapsed.

The Commission now wants to consolidate these proceedings with that initiated by Complete Office Supplies (NBR, 2/11/17, https://www.nbr.co.nz/article/commerce-commission-files-injunction-stop-platinum-equity-buying-officemax-b-209522. Complete Office Supplies is an Australian company that partners with OfficeMax competitor, NZ Office Supplies Ltd. See also commentaries for November 2013 for the OfficeMax/Office Depot merger, and October 2015 related to Staples/Office Depot.

NZ Oil & Gas Buys Back Into Kupe At Lower Price

NZOG Taranaki Ltd (NZ Public 53.3%; Australian Public 19%; JP Morgan Chase Bank NZ, various 17.81%; H&G Ltd, NZ 8.3%; Hong Kong Public 0.65%; various overseas 0.5%; Singapore Public 0.2%; UK Public 0.1%; North American Public 0.0812%) has consent to acquire a 4% interest in the Kupe Joint Venture including a freehold interest in approx. 200.1677 hectares at Manaia, Taranaki, from Mitsui E&P Australia Pty Ltd (Japanese Public 87%; The Master Trust Bank of Japan Ltd, Japan 7.5%; Japan Trustee Services Bank Ltd, Japan 5.4%), for $35 million.

The OIO states that NZOG Taranaki is a New Zealand based investor that specialises in investing in oil and gas-based assets. It has previously held a 15% interest in the Kupe Joint Venture. The investment is likely to result in the following benefits to New Zealand:

The investment will be largely overseen by New Zealanders, with NZOG Taranaki’s main offices located in Wellington; and
NZOG Taranaki and its subsidiaries have previously held a 15% interest in this asset and therefore is well versed in the requirements and responsibilities surrounding oil and gas assets; in particular, this asset.

Kupe is NZ’s third largest gas production facility, discovered in 1986 and coming into production in 2009 as a joint venture. It has been operated by Origin Energy, which bought a 50% interest in 2003 from Genesis Power Investments Ltd owned (by the Crown; see commentary of December 2003). With this transaction, Genesis now has 46% and NZOG 4%. The Decision buy came two months after NZOG sold its 15% stake in the Kupe oilfield to Genesis Energy for $168m to meet Genesis’ need for gas. It also sold its 27.5% in the Tui oilfields to a Malaysian-based energy giant Tamarind for just over NZ$1m (Harris, Stuff, 10/8/17; Wilkinson 16/2/17).

NZOG had reported a $27.6 million loss in the six months to December 2015, writing down the value of its Tui and Maari oilfields as world oil prices more than halved over the previous year (RNZ, 29/2/16). Since then, there have been takeover offers for NZ Oil & Gas Ltd, already reported here http://canterbury.cyberplace.org.nz/community/CAFCA/cafca17/jan2016-decision-in-full.html, with OGOG (Singapore) gaining control in mid-December 2017 – see next item.

NZ Oil & Gas Taken Over By OGOG Singapore

OG Oil & Gas (Singapore) Pte Ltd Ltd (Eyal Ofer, Israel 100%) has consent to acquire sensitive land, being OGOG’s acquisition of rights or interests in up to 70% of the fully paid ordinary shares of New Zealand Oil & Gas Ltd (NZOG), with assets of more than $100 million. Through a 4% interest in the Kupe Joint Venture, NZOG has an indirect interest in 200.1677 hectares of freehold land at Lower Inaha Road, Manaia, upon which the Kupe Production Station is constructed

The vendor is NZ Oil & Gas Ltd (NZ Public 53.3%; Australian Public 19%; JP Morgan Chase Bank NZ, various 17.8%; H & G Ltd, NZ 8.3%; Hong Kong Public 0.7%; various overseas 0.5%; Singapore Public 0.2%; UK Public 0.1%; North American Public 0.08%), and the price is approx. $84,000,000. The OIO states that OG Oil & Gas (Singapore) Pte. Ltd has made a partial takeover under the Takeovers Code for up to 67.55% of the ordinary shares of NZOG that it does not already hold.

OGOG is part of the Ofer Global Group, which is in shipping, offshore floating production, storage, and offloading platforms, commercial real estate, and banking and finance, and associated services. The investment is likely to result in the following benefits to New Zealand:

Creating two new jobs in the short term and, in the longer term, increasing the likelihood that the existing jobs will be retained;
Funding or creating a training and on-going education programme for a minimum of five New Zealand individuals wishing to work in the New Zealand petroleum industry;
Giving effect to Government policy expressed in the Minerals Programme for Petroleum 2013, which provides that benefit for New Zealand is best achieved by increasing New Zealand/s economic wealth through maximising the economic recovery of New Zealand’s petroleum resources; and
Attracting an investor committed to carrying out and funding exploration and production activities.

As already reported http://canterbury.cyberplace.org.nz/community/CAFCA/cafca17/jan2016-decision-in-full.html, takeover bids for NZOG have been in process for a couple of years. In January 2016, majority shareholder Zeta Resources (Malaysia) got OIO consent to buy up to 100% of NZ Oil & Gas Ltd, but that offer failed. In September 2017 OGOG, part of the Monaco-based Ofer Global Group, offered 77 cents for a maximum of 70% of NZOG – it already had 4.3% – and NZOG’s independent directors advised shareholders to accept. OGOG extended the offer to 8 January 2018 to get OIO consent but passed the 50% needed for control on 12 December.

Ofer Global wants to preserve NZOG’s exploration opportunities and has named the Barque prospect off Canterbury as too interesting to ignore. It intends to find international partners for the deep water prospect, which was ranked ninth among the world’s top oil and gas targets at a recent petroleum conference in NZ (Paul McBeth, 12/12/17, NBR, www.nbr.co.nz/article/og-oil-gas-crosses-50-threshold-bid-win-control-nzog-b-211050). The Barque prospect, for which there is now 3D seismic data, is part of NZOG’s joint venture with Lattice Energy which has just been taken over by Beach Energy , Australia – see next entry.

Beach Energy Buys Lattice For Half Kupe Joint Venture

Beach Energy Ltd Ltd (various overseas 61.4%; Seven Group Holdings Ltd, Australia 25.6%; Paradice Investment Management, Australia 6.9%; Dimensional Fund Advisors, Inc., USA 6%) has consent to acquire up to 100% of the fully paid ordinary shares in Lattice Energy Ltd which, through a 50% interest in the Kupe Joint Venture , owns or controls a freehold interest in 200.1677 hectares at Lower Inaha Road, Manaia, on which the Kupe Production Station is constructed.

The vendor is Lattice’s parent company, Origin Energy Ltd (Australian Public 99.2%; NZ Public 0.7%; US Public 0.1%; UK Public 0.1%, Hong Kong Public 0.1%; various overseas 0.10%; Singapore Public 0.1%) for approx. $1.75 billion. The OIO states that Beach Energy Ltd intends to acquire 100% of Lattice Energy Ltd which is currently owned by Origin Energy Limited. Lattice, through wholly owned subsidiaries, owns a 50% interest in the Kupe Joint Venture, which operates the Kupe Production Station and other assets associated with the Kupe gas field. Through a wholly owned subsidiary, Lattice also participates in one other petroleum exploration permit in the Canterbury basin.

It says the investment is likely to benefit New Zealand by:

Increasing the gas and condensate extraction efficiency of the Kupe gas field (including extending its life);
Additional capital investment to develop the Kupe gas field in excess of existing baseline commitments;
Consequential benefits to New Zealand in enabling more efficient exploration of relevant petroleum acreage in the Canterbury Basin and increasing access to and investment interest in that acreage; and
Advancing significant Government policy in terms of the purpose of the Crown Minerals Act 1991 and Minerals Programme for Petroleum 2013.

Based in Adelaide, Beach Energy Ltd is an oil and gas exploration and production company, and Australia’s largest onshore oil producer. Known until 2009 as Beach Petroleum, it is part of the S&P/ASX 100 index of major Australian companies. In NZ it already has a joint venture with Todd Exploration in the Northern Taranaki Graben and another with NZOG in the Canterbury Basin.

NZOG/Beach drilled a well in the latter in the 1980s and encountered gas with high liquids content, then in 2013 obtained 3D seismic data for the Barque and Tartan Wedge prospects (http://www.beachenergy.com.au ). In which OGOG (Singapore) is so interested. In 2016 Origin Energy decided to sell out of its conventional oil and gas interests, including Kupe and the Canterbury basin, to focus on energy markets and LPG. It chose the name Lattice Energy as part of the divestment process and initial public offer.

Hong Kong Buys Rest Of Dominion Salt From Japanese

Mineola Global Ltd (Gold Rainbow Int’l Ltd, Hong Kong [SAR] 45.3%; Trueway International Ltd, Hong Kong (SAR) 22.1%; Triluck Assets Ltd, Hong Kong [SAR] 7.5%; Hong Kong Public 25.2%; various overseas 0.01%) has consent to acquire 50% of the shares of Dominion Salt Ltd, which owns or controls a freehold interest in:

approx. 1,630 hectares at Lake Grassmere in Marlborough, and
approx. four hectares at Mount Maunganui, Tauranga

from Cerebos Gregg’s Ltd (Kotobuki Realty Co. Ltd, Japan 53.2%; Japanese Public 46.8%) for $36,880,150.

The OIO states that Mineola Global’s parent company, CK Life Sciences International (Holdings) Inc., indirectly acquired a 50% interest in Dominion Salt Limited in 2013. Dominion Salt owns a large solar salt field and refinery at Lake Grassmere, as well as a refinery in Mount Maunganui. Mineola is acquiring the remaining 50% of Dominion Salt shares through its sister company, Mindonio Ltd (both having 100% common ownership).

Mineola Global intends to continue developing the Dominion Salt Ltd salt business. They will undertake a benchmarking exercise of the salt operation against CK Life Sciences’ overseas salt operations to increase productivity and efficiencies. CK Life Sciences’ initial investment into Dominion Salt resulted in benefits to New Zealand, including increases in jobs and increases in export receipts. CK Life Sciences has also provided benefit to New Zealand with its other previous investments (via sister companies of Mineola Global), including increasing export receipts and registering a QEII covenant on land in Central Otago.

CK Life Sciences International is a subsidiary of Cheung Kong Holdings in Hong Kong. It is in the business of research and development, commercialisation, marketing and sale of biotechnology products. Its chairman is Victor Li, elder son of Li Ka-shing, chairman of Cheung Kong Holdings. It was founded in 2000 and listed on the Hong Kong main board in 2008 (see Wikipedia for subsidiaries etc.). It has investments in Australia, including in turf, pest and home garden products, health supplements and vineyards. In 2013 it bought Cheetham Salt, Australia’s largest producer of domestic salt. See also March 2014 re CK Life Sciences and Mudhouse Wineries.

Japanese Buy Up Rest Of ANZCO Meat

Itoham Foods Inc. (Japanese Public 92%; various overseas 8.1%) has consent to acquire the remaining 35% of the shares of ANZCO Foods Ltd, which has significant business assets in excess of $100 million and a freehold interest in:

approx. 74 ha. at Eltham, Taranaki
approx. 6.9 ha. at Waitara, Taranaki
approx. 203.9 ha. at Bulls, Rangitikei District
approx. 227.6 ha. at Christy’s Road, Canterbury
approx. 602.8 ha. at Seaside Road, Canterbury
approx. 361.4 ha. at Seafield Road, Canterbury
approx. 24.6 ha. at Blenheim, Marlborough
approx. 5.3 ha. at Ashburton, Canterbury
approx. 0.5 ha. at Dunedin, Otago
approx. 141.5 ha. at Kokiri, Westland,

from Nippon Suisan Kaisha Limited, Sir Graeme Thomas Harrison, JANZ Investments Ltd and ANZCO Employee Share Trust (NZ 50.4%; Taiwanese Public 0.2%; Japanese Public 49.4%), for $97,654,317.

The OIO states that Itoham Foods, which is a Japanese company that specialises in meat products, bought shares in ANZCO Foods Ltd (Asian NZ Food Company) in 1995 and now holds approximately 65% of the shareholding. It is seeking consent to acquire the remaining 35%, so that it will own 100% of shares in ANZCO. Itoham Foods has been a major shareholder in ANZCO for 20 years, making significant additional investment and introducing technology to grow the business.

ANZCO employs around 3,000 employees worldwide. Itoham Foods has also worked with ANZCO on joint ventures which created jobs throughout New Zealand. This investment will enable it to continue to support, develop and grow ANZCO. See also commentaries of April 2015, November 2013, January 2012, September 2011, May 2003, April 2001, September 2001, May 1997, January, June, August, September, October and November 1995, and September 1994 for ANZCO’s involvement in the NZ meat industry.

Craigmore Intensifies Canterbury Dairying

Craigmore Dairy II LP (European Public 58.8%; German Public 24.1%; UK Public 8.8%; Hong Kong [SAR] Public 4.2%; NZ Public 3.7%; various overseas 0.4%) has consent to acquire:

a freehold interest in approx. 233 hectares at 172 Te Pirita Road, Bankside, Selwyn District, Canterbury; and
a leasehold interest in approx. 297 hectares at 137 Te Pirita Road, Bankside, Selwyn District, Canterbury,

from The Crossing Ltd (Henrietta Lucy Brownlee, NZ 75%; William David George Brownlee, NZ 25%). Price is $12,452,090.

The OIO states that Craigmore Dairy II LP is an agricultural investment vehicle that is part of the wider Craigmore Farming Group. The land is currently operated as dairy support. Craigmore intends to convert approx. 313 hectares from dairy support land to dairy farming. The remaining approx. 217 hectares will continue as dairy support. It says the investment is likely to benefits New Zealand by:

Introducing additional investment to convert the land into effective dairy including building a milking shed;
Commencing the production of milk solids which is likely to increase milk processing in New Zealand and increase export receipts for milk products; and
Greater efficiency and productivity, including a more productive and profitable land use by converting land to dairy.

For more on the Craigmore Farming Group, including its foreign funding, see commentaries of May and August 2017, June, July and, September 2015, March, April, May, June, July, August and November 2014, February, March, November and December 2013, and June 2012.

US Money Managers Of NZ Forests And Farms

TRG Allocation LLC (US 79.4%; Thailand 9.2%; Philippines 9.1%; Singapore 2.36%) has consent to acquire the management rights of US companies that control limited partnerships that own sensitive land and significant business assets in New Zealand, including:

approx. 28,365 ha. of forestry land in Otago;
approx. 2,996 ha. of forestry land in Clutha;
approx. 1,530 hectares of forestry land in Taupo;
approx. 396 ha. of dairy farm land in Canterbury;
approx. 268 ha. of vineyards in Marlborough,

from GMO Renewable Resources, LLC LLC (US 71.3%; NZ 28.7%). Price is $3,495,996.

The OIO states that TRG Allocation LLC is part of a specialised asset management firm that focuses exclusively on investing in emerging markets. As part of a global merger between TRG and GMO Renewable Resources, TRG will acquire the management rights of certain general partner companies that manage limited partnerships that own (via subsidiary companies) sensitive land and significant business assets in New Zealand. TRG is not acquiring a beneficial interest in the land and assets as a result. The investment is likely to result in the following benefits to New Zealand:

maintaining New Zealand’s overseas image and international relations by allowing a global transaction that contains a minor New Zealand element to proceed; and
the creation of two ongoing full-time jobs with the New Zealand-based investment team.

Maintaining NZ’s image overseas, no less! Not one of the criteria in our Overseas Investment Act or the new Directive, and hard to see it as a benefit. In fact, the impact of global corporate mergers on competition in NZ is a Commerce Commission criteria.

TRG Allocation LLC (reg. Delaware, USA), is part of the New York-based Rohatyn Group: (https://www.rohatyngroup.com). “After building JP Morgan’s emerging markets business, Nicolas Rohatyn and other founding partners saw an opportunity to leverage their unique combination of knowledge, skills and contacts to provide specialised expertise in emerging markets”.

It has “grown from a single hedge fund to a fully diversified asset manager… supported by a robust business management platform with expertise in legal and compliance, global operations and custody, risk management, marketing, investor relations and information technology…”. It operates in 18 cities globally, and the merger with GMO cuts TRG a slice of forestry and agriculture in NZ.

GMO (www.gmo.com ); founded in 1977 by Jeremy Grantham, Richard Mayo and Eyk van Otterloo) is an investment management private partnership with global portfolios, involving equity, fixed income, multi-asset class, and alternative investment strategies. “GMO is known for blended fundamental and quantitative investment research expertise and a long-term orientation toward value opportunities” – I think that means “shareholder value” or profits first.

Its GM Renewable Resources arm has managed investments in forestry and other rural land since 1997, through pooled and separate funds “to optimise land use and performance” (PE Hub Network, 4/8/17 www.pehub.com/2017/08/trg-to-buy-gmo-renewable-resources). A 33,555 ha. example of global money men controlling our environment. For past acquisitions by GMO Renewable Resources in NZ, see March 2011, April, June and September 2005, August and October 2000, June 2002, May 2001, May 1999, August 1995 and November 1993.

T&G Buys Hastings Land For Apples

T&G Global Ltd (Germany 74%; China 20%; NZ Public 5.9%; various overseas 0.1%) has consent to acquire a leasehold interest in 19.9142 hectares at 112 Tennant Road, Hastings, from Geoffrey Kenneth Taylor, Carolyn Marie Taylor, and SH 5 Trustee Ltd as trustees of the Tennant’s Bend Farm Trust, (NZ 100%). Price is $1,847,397.

The OIO states that Apollo Apples (2014) Ltd is a 100% subsidiary of T&G Global, a grower, distributor, marketer, exporter and processor of fresh produce. T&G intends to use the land to develop an apple orchard, growing Envy, Jazz, and Galaxy apple varieties predominantly for export, with the expected end of the orchard’s life being in 2040. The investment is likely to result in the following benefits to New Zealand:

creating additional jobs in relation to planting, pruning, picking, and packing apples;
increasing apple production;
increasing export receipts;
capital investment for infrastructure, fencing, irrigation, tree planting, and maintenance; and
additional royalties for plant variety rights payable to Plant & Food Research.

T&G has made a flurry of land purchases for Apollo Apples orchards – $16,691,134 worth in December 2016 alone. See June and August 2017, February, July and December 2016 (5) and November 2014.

Sauvage Family Buys Another Cromwell Vineyard

Sauvage Family Vineyard Vineyard (Marquis and Dianne Sauvage, USA 100%) has consent to acquire approx. 6.4287 hectares at Felton Road, Bannockburn, Cromwell, from Vintner Holdings Bannockburn Ltd, (Yvon Emile Louis Montagnat, NZ 75.1%; Marianne Aline Montagnat, NZ 24.9%). Price is $1.5 million.

The OIO states that Sauvage Family Vineyard has an established premium wine making and exporting business and wishes to buy the land to meet self-sufficiency targets and have security of ongoing supply of grapes. The investment is likely to result in benefits to New Zealand by:

Introducing substantial additional investment for development to convert the land to an organic and biodynamic vineyard;
Successful previous investment in an adjacent vineyard which generates export receipts and employment; and
Enhancing the viability of other investments by providing Sauvage with additional secure supply of quality grapes for its premium wine manufacturing.

The Sauvage Family owns the Burn Cottage and Cote Sauvage vineyards, both in Central Otago, as well as Koehler Ruprecht estate in the Pfalz region of Germany, and several wine importing and wholesaling companies in the USA, managed by various family members. See commentaries of October 2008, and March and October 2002.

Canadian Pension Funds Juggle Huge NZ Assets

CPPIB US RE-3, Inc. (Canada Pension Plan Investment Board Canada 100%) has consent to acquire 50% of the securities in PSPIB Waiheke Inc. , with significant business assets and a freehold interest in sensitive land, being:

approx. 15 ha. at Redwood, Christchurch;
approx. two ha. at Centre City, New Plymouth;
approx. 18 ha. at Botany Town Centre; and
approx. nine ha. at Nelson Junction Shopping Centre

from the Public Sector Pension Investment Board (Canadian Government 100%). Price is $230 million.

The OIO states that CPPIB US RE-3, Inc. is a Canadian based pension fund that specialises in long term real estate investments globally. The Public Sector Pension Investment Board will continue to own a 50% interest in the shares of PSPIB Waiheke Inc. The investment is likely to result in the following benefits to New Zealand:

Consequential benefits of providing additional equity funding for future developments of the PSPIB Waiheke Inc.’s portfolio in New Zealand; and
Advancing significant Government policy and strategy.

What policy and strategy? How does buying half PSPIB’s shares in itself increase funding for development? The new Directive tells the OIO to increase information to the public about applications and Decisions (para. 32.4), but this one is more than usually cryptic for a deal involving a very large slice of NZ property. This deal has been a year in the making and involves an estimated value of $1.1bn of NZ commercial and residential real estate, according to LawFuelNZ (19/12/16).

LawFuelNZ says the property assets of PSPIB’s wholly owned subsidiary, Waiheke In. include the Botany town centre, Manukau Supa Centre, and the 13-floor St Paul’s Square office building in Wellington which is undergoing a $38m refurbishment as part of a new 15-year lease with the Government. Most of It is the AMP Capital Property Portfolio which PSIB bought in 2014 (see OIO consent of November 2014), which continues to be managed by AMP Capital Investors (NZ) Ltd.

The Otago Daily Times (15/12/16, https://www.odt.co.nz/business/biggest-property-deal-year-11b-sale-proposed) said this could be the biggest property sale of the year and listed PSPIB Waiheke Inc. properties as: Retail: Botany Town Centre, Auckland; Northwood Supa Centa, Christchurch; Manukau Supa Centa, Auckland; Centre City Shopping Centre, New Plymouth; Nelson Junction, Nelson, half share in Bethlehem Town Centre, Tauranga; Offices: Tower Centre, 45 Queen St, Auckland, 51 Shortland St, Auckland, 385 Queen St, Auckland, 109 Featherston St, Wellington, Freyberg House, Wellington, PwC Tower (office) and Capital on the Quay (retail), Wellington, St Paul’s Square, Wellington; plus development land in Christchurch.

NZ Herald (13/12/16,http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11765930 ) said the Canada Pension Plan Investment Board has some $NZ317 billion worth of assets to help fund the national pension plan, and that PSPIB has $C20.4 billion worth of real estate, which is 17.4% of its overall assets. PSPIB’s 2016 annual report noted its core retail assets in New Zealand benefited from valuation increases that year; its other NZ Zealand assets include dairy farms and a stake in Kaingaroa Timberlands.

For past OIO consents for the Canada Pensions Plan Investment Board, June and September 2016, September 2015, November 2014 and April 2008. See also 2008 articles by Quentin Findlay, “Airport 07”, in Watchdog 116, December 2007, http://www.converge.org.nz/watchdog/16/01.htm and Bill Rosenberg, “International Capital And Investment”, in Watchdog 126, May 2011, http://www.converge.org.nz/watchdog/26/07.htm. For PSPIB consents, see February and June 2016, September and November 2015, October, November and December 2014 and April 2013.

CDL (Singapore) Increases Its Share In NZ Hotels

City Developments Ltd Ltd (Hong Leong Group, Singapore 48.4%; Singapore shareholders 19.5%; Asia [excluding Singapore] shareholders 3.6%; North America shareholders 11.5%; UK shareholders 4.6%; Europe [excluding UK] shareholders 3.1%; others 9.3%) has consent to acquire shares in Millennium & Copthorne Hotels plc which, via its interests in Millennium & Copthorne Hotels NZ Ltd and CDL Investments NZ Ltd, (and their other subsidiaries), has interests in approx:

5.2250 hectares of land in the Far North District
27.8617 hectares of land in Auckland Council region
101.4772 hectares of land in Hamilton City region
1.0109 hectares of land in the Rotorua District
0.8819 hectares of land in the Southland District
11.7755 hectares of land in Nelson City region

from minority shareholders of Millennium & Copthorne Hotels plc, at a cost of up to around $1,309 million for 34.8% of Millennium & Copthorne Hotels plc, which excludes a special dividend of around $0.38 per share.

The OIO states that City Developments Ltd proposes to increase its existing ownership interest in Millennium & Copthorne Hotels plc, which holds interests in Millennium & Copthorne Hotels NZ Ltd and CDL Investments NZ Ltd, which hold interests in sensitive land and collectively have assets valued at over $100 million. The investment is likely to result in the following benefits to New Zealand:

previous investments, including introducing over $120 million at present dollar value of additional capital and employing approx. 1,200 employees in New Zealand; and
maintaining New Zealand’s image overseas, because the underlying transaction triggering the consent requirement occurs in anticipation of an upstream takeover between two foreign-listed companies.

Worrying about NZ’s image again! God forbid we should be seen to inconvenience the big boys in rearranging their portfolios and corporate ownership structures. The companies in this overseas merger are already well intertwined in NZ.

Singapore-listed City Developments Ltd (CDL, http://www.cdl.com.sg) is a real estate operating company spanning 26 countries. As one of Singapore’s largest companies by market capitalisation, its portfolio comprises residences, offices, hotels, serviced apartments, integrated developments and shopping malls, it is one of Singapore’s largest commercial landlords and landbankers. Millennium & Copthorne Hotels plc is a global hospitality management and real estate group, with 120 hotels in 79 locations in Asia, Australasia, Europe, the Middle East and North America. It’s based in London and is on the London Stock exchange.

See Stuff, (18/10/16, www.stuff.co.nz/business/property/85164931/hotels–who-are-the-biggest-players) about CDL having the second largest share of NZ hotel beds, including Copthorne and Millennium hotels. For other consents related to CDL Hotels in NZ, see August 2009, June 2007, December 2006, April 2005, June 2004, August 2001, May 2003, May and December 2002, June and July 2000, February 1998, March 1997, January, August and October 1996, July and November 1995, April July October 1994.

See also CAFCA’s September 2000 submission on the Singapore Free Trade Agreement. See also the next item for CDL’s acquisition of land for residential development. For past consents related to Millennium and Copthorne Hotels in NZ – some of them the same ones – see November 2014, August 2009, June 2007, April 2005, June 2004, May 2003, May and December 2002, June and August 2001 and June 2000.

CDL Land (Singapore) Buys More Land For Housing

CDL Land NZ Ltd (NZ Public 38.97%; Hong Leong Group, , Singapore 24.5%; Singapore Public 22.3%; various overseas 11.1%; UK Public 3.3%) has consent to acquire 46.0188 hectares at 42A Puketaha Road, Puketaha, Hamilton from Geange Farms Ltd (NZ 100%). Price is $23 million.

The OIO states that CDL Land’s business is the acquisition and development of land from an undeveloped form to residential housing sections. CDL plans to develop a modern high quality residential subdivision and sell the sections on the open market. The subdivision is intended to include supporting open space, commercial and social activities. The OIO states that CDL has a number of previous investments in NZ, which have created jobs and residential housing sections, including in Auckland, Christchurch and Hamilton, and that New Zealanders own approx. 39% of CDL Land’s parent company, City Developments Ltd, which is an NZX listed company.

The NZX listing is CDL Investments. For CDL Land acquisitions for residential and commercial subdivisions see October 2017, November 2013, August 2009, May, June and September 2007, September and December 2006, April 2005, May, June and September 2003, May and December 2002, August 2001, June and July 2000, March 1997, August and October 1996, February and November 1995, and October 1994 for CDL’s purchase of Landcorp, a government SOE managing property owned by Government departments.

Chinese Buy Westgate Land For Housing

Universal Homes Ltd (Chinese Government, PR China 97.2%; Joint investment financial product no.3 between AnBang Asset Management, China Merchants Bank and AnBang Asset, PR China 1.2%; China Development Bank, PR China 0.8%; Beijing Qidian Lingyu Stage One Investment Centre, PR China 0.8%) has consent to acquire a freehold interest in approx. 42 hectares at Westgate, Auckland, from Westgate Joint Venture (NZ Public and various NZ 100.0%). Price is $150 million.

The OIO states that Universal Homes is a property developer in medium and high density residential developments, producing the whole product from subdividing the land through to finished homes. The investment is likely to result in the following benefits to New Zealand:

Achieving greater efficiency and productivity in the high housing demand area of Auckland by producing a large number of properties in a short timeframe.
The introduction of significant capital for development purposes to fund the developments.
Advancement of a significant Government policy or strategy through the increased supply of new homes in the Auckland region.

Universal Homes Ltd has been building in New Zealand for 55 years, though the name is, well, universal. In OIO consents from 1996 it was a Singapore-owned company with about 27% Chinese shareholding; this is the first consent in which the company is a Chinese government investment (the Companies Office has the ultimate owner as China Merchants Group, Beijing).

The NZ-registered subsidiary works out of Albany. See OIO consents of February and June 2004, May June and September 2003, February, July, September and October 2002, June and November 1999, February 1998, April and October 1997, July 1996 for acquisition of development land, and July 1996 for a mortgage company.

The Westgate Joint Venture is a collection of landowners in the area near the Westgate Shopping Centre, who are participants in Environment Court cases related to the Auckland Unitary plan. Whale Oil (4/2/18 www.whaleoil.co.nz/2018/02/labour-calms-theyve-banned-overseas-speculators-herald-article-proves-theyve-done-no-thing ) cites this consent as evidence of Labour allowing foreign speculation in Auckland housing but i) Universal Homes appears to be buying undeveloped land; ii) Labour’s Bill to prevent foreign purchase of existing homes is still before Parliament.

Chinese To Build Hotel In Queenstown

NZ ZhiXiang Investment Ltd Ltd (Wai Shing [Wilson] Wong, PR China 80%; Shuchao Weng, PR China 10%; Wenshuai Wang, China, People’s Republic of 10%) has consent to invest in significant business assets in NZ, being the establishment of a business holding long term commercial property (including a hotel) for investment purposes, with expenditure of $121.9 million.

The OIO states that the investment is ZhiXiang’s first long term commercial property project in New Zealand. They intend to acquire approx. 1.024 hectares of non-sensitive land in Queenstown and construct a hotel. The OIO is satisfied that the individuals who will control the investment have the relevant business experience and acumen and are of good character, and ZhiXiang has also demonstrated financial commitment to the investment. No vendor is named as ZhiXiang are investing in their own operation and the urban land they are buying is non-sensitive.

Campaign Against Foreign Control of Aotearoa,
P.O. Box 2258
Christchurch.