Foreign investment in Aotearoa/New Zealand
Overseas Investment Office – February 2009 Decisions
Australian Buys Cambridge Farm
Fieldhouse Ltd (100% Australian owned) has received approval for the acquisition of a freehold interest in 15.7909 hectares of land at 278-292 Stokes Road, Cambridge, from Ian Trevor Crampton and Marilyn Laura Crampton of Aotearoa. The OIO states:
“Mr Gott, an Australian citizen, is the sole shareholder and director of the Applicant. Mr Gott currently has interests in pedigree bloodstock, including broodmares and yearlings, in New Zealand. The Applicant intends to acquire the land, which is currently used for lifestyle purposes and the grazing of cattle, to develop and maintain as a boutique horse stud. The acquisition of the land and subsequent operation of a horse stud will enable the Applicant to continue to cement existing ties to the industry and region. Mr Gott intends to keep a maximum of four broodmares on the land to ensure the continued quality of the progeny produced”.
Decision # 200820032
UK Pension Fund Acquires More Central North Island Land
Trustees of the JO Adams & Son Limited Pension Fund, United Kingdom (100%), has been granted approval for the acquisition of a freehold interest in 61.8400 hectares of land at State Highway 1, RD5, Taihape, deemed sensitive land, from Laurence Joseph & Ann Sellors Abernethy of Aotearoa, for $956,260. This is the same piece of land on which the OIO denied an application from the same purchaser and vendor, just four months earlier (see October 2008 Decisions). There is no explanation for the change of mind. The OIO states:
“The land acquisition will bring together the subject land and the existing farm comprising 159.4269 hectares that the Pension Fund already owns, reuniting land that, until 1981, was farmed as one economic unit. Upon acquisition, JO Adams & Sons Limited (the Company) will lease the land from the Pension Fund and will continue the current farm policy of deer and fawn production, as well as sheep and cattle farming. The Pension Fund and the Company advise that the acquisition of further suitable land in the Taihape area will provide greater economies of scale and if will create efficiencies to their current farming operations. The acquisition of the subject land will represent an 11.61% increase in the Pension Fund’s current landholdings in the area and will increase the number of cattle and sheep across the farms”. This is not the first time the JO Adams & Son Limited Pension Fund has successfully applied to the OIO re land purchases (see April 2001 and May 2002).
Decision # 200821660
Aussie Buys Interest In Ashburton Dairy Farm
An overseas investment in sensitive land has been approved, namely BNZ AgriCapital Limited‘s, of Australia (100%), acquisition of rights or interests in 46.2% of the shares of Lauriston Dairies Limited which owns or controls a freehold interest in 377.4447 hectares of land at 1375 Line Road, Lauriston, Ashburton, from Craig Robert and Helen Theresa Elliot and Graham Bruce Robertson of Aotearoa. The consideration was deemed “confidential”. The OIO states:
“Beith Farm Limited (BFL) has entered into a conditional Agreement for Sale and Purchase of Real Estate to acquire the relevant land. As part of a financing arrangement offered by Bank of New Zealand and BNZ AgriCapital Limited (BNZAC) it is proposed that a special purpose vehicle, Lauriston Dairies Limited (Lauriston Dairies) will be established to acquire the relevant land. BNZAC will initially hold 24.99% of the shares in Lauriston Dairies, with the remaining 74.01% held by BFL. Lauriston Dairies will acquire the relevant land which is currently used for sheep and beef finishing and cropping and undertake a conversion to dairy farming. BNZAC proposes to increase its shareholding in Lauriston Dairies Limited from 24.99% to 46.15%”.
BNZ AgriCapital was formed in 2007 as a joint venture between BNZ Agribusiness Financial Services and nabCapital with the specific purpose of taking equity stakes in some of New Zealand’s best farms. And if they can’t get partial ownership, these Aussie banks will charge excessive interest rates instead!
Decision # 200820036
Another Aussie Buys Into The South Island
Further overseas investment in sensitive land has been approved, being Timothy James Cooper‘s, Australia (100%), acquisition of rights or interests in 50% of the shares of Fish Hook Limited which owns or controls a freehold interest in 9.5300 hectares of land at State Highway 6, Luggate-Cromwell Road, Wanaka, from Convince New Zealand Limited New Zealand (100%) for $125,000. The OIO states:
“Fish Hook Limited has been incorporated to develop a vineyard on the relevant land for the production of grapes and wine. It is intended that six hectares of the land will be planted with grapes to ultimately produce Pinot Noir and Pinot Gris wine. The Applicant views the acquisition of the shares in Fish Hook Limited as a way of diversifying his personal investment portfolio”.
Decision # 200821543
Swiss Cement Transnational Acquires Oamaru Land
Yet another overseas investment in sensitive land has been approved, being Holcim (New Zealand) Limited‘s, Switzerland (60%), United Kingdom (20%), Various (10%), United States of America (10%), acquisition of a freehold interest in 90 hectares of land at 265 Airedale Road, Weston, North Otago, from Neil John & Elizabeth Anne Harvey of Aotearoa, for $806,400. Holcim has previously received OIO approvals for other land purchases in the area (see Decisions in December 07, January 08 and June 08). The OIO states:
“Holcim’s Westport cement works is presently operating at capacity and cannot meet current domestic demand, and it also has a limited economic life. Holcim has actively investigated its future alternatives, including a range of upgrade alternatives for the Westport plant, importing cement either to supplement the Westport operation or to replace domestic manufactured cement with imported cement and a new cement plant at Weston, Waitaki district, North Otago.
“Holcim proposes to establish and operate a cement manufacturing complex on land owned by Holcim adjacent to the Weston-Ngapara Road, Waitaki district. The land is situated adjacent to the proposed Holcim limestone/siltstone and tuff quarries which will provide the raw materials for the proposed cement plant. The land will form buffer land to the existing Holcim land on which quarries will be constructed and operated”.
Decision # 200821643
Roger Award Finalist Buys Large Farm For Wind Farm Project
Contact Energy Limited, Various (54.211%), Australia (23.6835%), New Zealand (18.7979%), United Kingdom (3.3077%) has received approval for the acquisition of a freehold interest in 877.2772 hectares of land at Totara Downs (deemed sensitive land), situated in Onewhero, Franklin District, from Bramwell Farms Limited, New Zealand (100%), for $8,637,500. The OIO states:
“Contact proposes to purchase the land (known as the Totara Downs Land) in order to progress the Hauauru ma raki wind farm project (Project). The Project was announced in October 2007 and has the potential to generate up to 540 MW of clean, renewable and climate-friendly electricity to power up to 200,000 average homes. The Totara Downs Land is one of the key properties along the route of Contact’s electricity transmission line for the Project. The property is located directly along the route that Contact has identified as being appropriate for the transmission route, following intensive analysis of the engineering requirements and topography of the area. Contact proposes to purchase the land and establish easement rights to protect its operations. Contact will install up to 11 pylons, the land area to be occupied by the pylons being approximately 0.1 hectares. The remainder of the land will be available for pastoral use”.
Contact Energy has unfortunately been a frequent finalist in the Roger Award and is therefore a company we should be wary of. In 2008 it increased prices to its customers, while at the same time doubled the fees it paid to its directors. A Massey University accountancy professor suggested use of a certain accounting method was helping Contact justify the price increases. Contact subsequently lost nearly 6% of its customers as well as gaining a well deserved nomination for the 2008 Roger (for details of why Contact was a Roger Award finalist, again, in 2008, see the Judges’ Statement here. Ed.).
Decision # 200821582
Contact Energy Buys Up More Land For Wind Farm
Contact Energy Limited, (see previous Decision for ownership details), has received further approval for overseas investment in sensitive land, namely the acquisition of a freehold interest in 186.2608 hectares of land at 401 & 491, Otuiti Road, Pukekawa, from Matthew Arnold and Ethne Anne Hewitt of Aotearoa, for $5,343,750. The OIO states:
“Contact proposes to purchase the land (known as the Hewitt Land) to progress the Hauauru ma raki wind farm project (Project). The Hewitt Land is one of the key properties along the route of Contact’s electricity transmission line for the Project (see above Decision for details. Ed.). The property provides scope to explore alternative routes in a section of the line that may pass through a number of smaller lifestyle farms, and therefore minimise the number of people who may be directly affected by the visual and landscape effects of the proposed transmission line. Contact’s view is that purchasing the Hewitt Land is fundamental to the success of the Project. If it is not able to acquire the Hewitt Land, the Project cannot proceed unless an alternative switchyard site and corridor for the planned transmission route can be identified”. Contact has purchased several properties with the OIO’s blessing in the past (see July 2006, September 2007, and January, July, October and November 2008).
Decision # 200821609
$1.3 Billion Aussie Share Shuffle Of NZ Retirement Assets
An overseas investment in sensitive land, being Retirement Villages New Zealand Limited‘s, (Australia 93.7%, Various 6.3%), acquisition of rights or interests in 100% of the shares of Metlifecare Limited (Australia 81.98%, Various 18.02%) which owns or controls:
- a freehold interest in 1.8773 hectares of land at 12-20 Edgewater Drive, Pakuranga, Auckland;
- a freehold interest in 17.9020 hectares of land at 1 Henley Way, Paraparaumu;
- a freehold interest in 10.1014 hectares of land at 66 Avonleigh Road, Green Bay, Auckland; and a freehold interest in 2.7389 hectares of land at 33 Gloucester Road, Mt Maunganui, Tauranga.
OIO approval is also sought as an overseas investment in significant business assets, being Retirement Villages New Zealand Limited‘s, (Australia 93.7%, Various 6.3%), acquisition of rights or interests in 100% of the shares of Metlifecare Limited (Australia 81.98%, Various 18.02%), the value of the assets of Metlifecare Limited and its 25% or more subsidiaries being greater than $100m. The assets being transferred are considerably larger than $100 million, over 13 times in fact, at $1,307,863,000! It is one of the largest overseas investment transactions to go before the OIO this year. The OIO states:
“The Applicant currently holds approximately 81.98% of the share capital of Metlifecare Limited (Metlifecare). Metlifecare owns and operates 17 retirement villages throughout New Zealand, incorporating ten care facilities and eight hospitals. Metlifecare requires new capital and is proposing to raise up to approximately NZ$37.8 million by way of a renounceable rights issue to existing shareholders (“Rights Issue”). The Applicant intends to take up its entitlement under the Rights Issue. In the event that some shareholders of Metlifecare do not accept the offer, the Applicant would increase its percentage shareholding in Metlifecare and therefore has sought consent. The Rights Issue will provide Metlifecare with needed capital which will be used by Metlifecare to reduce debt and further develop its business. The Applicant takes a long-term view of its investments and recognises the attractive underlying demand demographics and essential service characteristics of the retirement village business of Metlifecare”.
Decision # 200821667
Another Enormous Aussie Share Shuffle Of NZ Retirement Homes Approved
The OIO has approved an overseas investment in significant business assets (the consideration of which exceeds $100m) and sensitive land, being Lend Lease Corporation Limited‘s, (Australia 75.66%, USA 11.15%, United Kingdom 8.53%, Various 4.66%), acquisition of rights or interests in 100% of the stapled securities of the Vendor, each stapled security being made up of one share in Babcock & Brown Communities Limited (BBCL), (Australia 92.59%, New Zealand 4.1%, Various 1.7%, Hong Kong 1.61%), and one unit in Babcock & Brown Communities Trust (BBCT), BBCL being the ultimate parent company of Primecare Holdings Limited which owns or controls:
- a freehold interest in 12.6383 hectares of land at Knightsbridge Village, Graham Collins Drive, Mairangi Bay, Auckland; and
- a freehold interest in 14.3888 hectares of land at Peninsula Club, 441 Whangaparaoa Road, Whangaparaoa, Auckland
The consideration stated was $195 million. The OIO states, in relation to Babcock and Brown: “The Vendor is Australia’s second largest listed retirement sector and aged care owner and operator. The Vendor currently operates 56 retirement villages and 29 aged care facilities in Australia and New Zealand” . Well it appears BBCL now seems to be “retiring” its ambitions in this sector as well just about every other sector that its parent Babcock & Brown (B&B) operates in. BBCL is currently the target of an $A130m takeover offer by smaller competitor Prime Retirement and Aged Care Trust in Australia. Babcock & Brown, a former multi-billion dollar high flying Aussie based investment bank, has been one of the more spectacular casualties of the 2008 credit crunch. In 2009 it has been ejected from the Australian Securities Exchange for falling to file accounts. Perhaps it didn’t want to report a $5.4billion loss, the second largest in Aussie corporate history!
As the Dominion Post reported (24/6/09): “While the receivers, Deloittes, continues to trawl through the wreckage…B&B continues to burn as much as $1million a day internationally on rent, wages and consultants fees. Meanwhile, B&B Chief Executive Phil Green has left for Tuscany at the beginning of June, before heading off to watch the tennis at Wimbledon and cricket at Lords. Chairman Jim Babcock, is reported to be building a large house in San Francisco, reputedly worth $US15million. B&B was placed in receivership in March 2009 after noteholders, mostly based in NZ, voted to put the company under. But the action was futile as the listed company was merely a shell, with all the operating businesses held by a subsidiary, B&B International, where the banks held sway”. The OIO states, in the case of Lend Lease Corporation Limited, that:
“The Applicant is focused on becoming a leader in the retirement sector and, by entering into and completing the proposed transaction, including the Investment, the Applicant will achieve this strategic goal by becoming the manager of, and major investor in, one of Australia’s leading aged care operators”. Lend lease has received previous OIO approval for aged care purchases (see December 2008) and also owns Morrison & Co, manager of Infratil which was a 2008 Roger Award finalist (see the Judges’ Statement here. Ed.) Another Lend Lease subsidiary, Bovis Lend Lease, is currently under investigation in New York for “irregular billing practices involving union foremen” (NZX announcement, 9/6/09).
Decision # 200821564
The Aussies Want Our Rental Car Industry As Well
The OIO has approved an overseas investment in significant business assets, being Next Capital (Services A) Pty Limited as Trustee for the Next Capital Fund 1A and Next Capital (Services B) Pty Limited as Trustee for the Next Capital Fund1B’s, (Australia 100%), acquisition of rights or interests in 100% of the Shares of New Zealand Rental Group Ltd, the value of the assets of New Zealand Rental Group Ltd and its 25% or more subsidiaries being greater than $100m. The seller was existing shareholders in New Zealand Rental Group Ltd other than Next Capital (Australia 52.45%, New Zealand 47.55%) These shares were valued at $215 million. The OIO states:
“Consent was granted on 28 July 2006 for Bligh Investments Limited (Bligh) to acquire the business and assets of Hirepool Limited, Hirepool IP Limited & Nationwide Equipment Limited (together the Hirepool Group). At that time, the Next Capital Fund 1A and the Next Capital Fund 1B owned 100% of Bligh. Bligh has subsequently been renamed New Zealand Rental Group Limited. Since the acquisition the ownership and controlling interest of the Applicant in New Zealand Rental Group Limited has been reduced through the introduction of further investors principally management and institutional investors. The Applicant currently holds 56.58% of the securities in New Zealand Rental Group Limited.
“To raise further equity, New Zealand Rental Group Limited has offered its existing security holders the opportunity to subscribe for new securities on a pro rata basis. It is also likely that New Zealand Rental Group Limited will require further injections of new equity capital from time to time. If the Applicant takes up these offers and other security holders do not take up further shares on a pro rata basis, this will have the effect of the Applicant increasing its security holding. The Applicant also seeks consent to acquire securities in New Zealand Rental Group Limited from other security holders if and when other security holders wish to sell down their investment. The proposed acquisition of securities by the Applicants will provide New Zealand Rental Group Limited with additional equity capital from time to time, and enable other existing security holders to exit their investment if they wish to do so”. Next Capital is already a major player in the New Zealand health food market, having acquired health food and supplements manufacturers Healtheries in October 2006 and Nutra-Life in December 2006.
Decision # 200910037
Another Aussie Share Shuffle, This Time Of A Significant Power Network
Approval has been given for Queensland Investment Corporation (QIC) Private Capital Pty Limited‘s, (Australia 100%), acquisition of rights or interests in 50% of the shares of Powerco NZ Holdings Limited which owns or controls:
- a freehold interest in 0.2022 hectares of land at 11 Main Road, Tairua (SH 25); and
- a freehold interest in 0.9233 hectares of land at 40 Alach St, Gate Pa.
An overseas investment in significant business assets, being the Applicant’s acquisition of rights or interests in 50% of the shares of Powerco NZ Holdings Limited, the consideration of which exceeds $100m. In fact, it significantly exceeds $100m; the consideration quoted was $415,201,866. The seller was Babcock & Brown Infrastructure Networks (New Zealand) Limited, (Australia 98.21%, New Zealand 1.41%, various 0.38%). The OIO states that:
“BBI Networks (New Zealand) Limited (“BBI”) owns Powerco Limited, Powerco Transmission Limited and Independent Transmission Services Limited (together being “the Powerco Group”). BBI have decided to sell a 50% interest in the Powerco Group. BBI require further capitalisation to enable the Powerco Group to fulfil its business plan. The investment benefits the Powerco Group in terms of financing capacity i.e. the improvement in the ability to obtain debt finance and additional equity.
“The Applicant is ultimately managing the investment on behalf of the Queensland s uperannuation schemes and the Queensland State Government. As such, the Applicant has long-term investment horizons and seeks investments to which it can add value as a less than 100% owner. As an asset class, energy distribution is perceived as a good return and the Applicant considers the investment is consistent with its investment aims”. QIC is one of Australia’s largest institutional fund managers with more than $80 billion in funds under management. Powerco has 300,000 electricity and 100,000 gas customers in the North Island. BBI is desperate to sell, as part of Babcock & Brown, the beleaguered Aussie investment bank (see previous commentary on retirement village sale).
Decision # 200821569
Hold The Press: QIC Can’t Make Its Mind Up And Wants More Of Powerco
Not content with the approval received three weeks earlier for 50% of Powerco, QIC came back for more. Specifically, the OIO has further approved Queensland Investment Corporation (QIC) Private Capital Pty Limited’s, (Australia 100%), acquisition of rights or interests in 100% of the shares of Powerco NZ Holdings Limited (see previous Decision for details). Same vendor, i.e. Babcock & Brown Infrastructure Networks (New Zealand) Limited, (Australia 98.21%, New Zealand 1.41%, Various 0.38%), this time the consideration quoted was $423,460,120. The background information provided by the OIO (see below) states QIC is acquiring another 8% of Powerco. The OIO states:
“On 3 February 2009, Ministers granted consent for the Applicant to give effect to the indirect acquisition of rights or interests in 50% of the shares of Powerco NZ Holdings Limited. The Applicant now proposes to make a supplemental investment in Powerco NZ Holdings Limited by the QIC Power Trusts by acquiring an additional 8% of the shares of Powerco NZ Holdings Limited”.
Decision # 200910039
Summary Statistics February 2009
All investments
| February 2009 | Jan-Feb 2009 | Jan-Feb 2008 | |
|---|---|---|---|
| Number of approvals | 12 | 22 | 17 |
| Net Investment $ | Confidential | Confidential | 104,812,165 |
| Gross value of consideration | Confidential | Confidential | 1,962,348,299 |
| Asset Value | 1,524,863,000 | Confidential | N/A |
Investments involving land
| February 2009 | Jan-Feb 2009 | Jan-Feb 2008 | |
|---|---|---|---|
| Number of approvals | 12 | 21 | 12 |
| Net land area (ha) | 1,419 | 1,957 | 266 |
| Gross land area (ha) | 1,680 | 2,823 | 450 |
Other interests in land approved for sale (for example leases and crown pastoral leases)
| February 2009 | Jan-Feb 2009 | Jan-Feb 2008 | |
|---|---|---|---|
| Number of approvals | 0 | 5 | 2 |
| Net land area (ha) | 0 | 2 | 14 |
| Gross land area (ha) | 0 | 25,980 | 71 |
Fishing Quota
As usual there was no fishing quota approved for sale this month.
Campaign Against Foreign Control of Aotearoa,
P.O. Box 2258
Christchurch.