Foreign investment in Aotearoa/New Zealand
Overseas Investment Office – April 2009 Decisions
Australians Consolidate Holding In NZ Retirement Villages
On April 1, 2009 (let’s hope it’s not an April Fools’ Day joke!) FKP Limited and Macquarie Group Limited and their associates jointly and or severally Australia (76.425%), Various (23.4455%), New Zealand (0.1295%) received approval for the acquisition of up to 100% of the stapled securities in Retirement Villages Group (which includes shares in RVNZ Investments Limited) either directly or indirectly in whatever proportions they may determine from time to time and giving effect to the transaction, which will result in an overseas investment in sensitive land, being the Applicant’s acquisition of rights or interests in 100% of the shares of RVNZ Investments Limited which owns or controls:
- a freehold interest in 2.7389 hectares of land at 33 Gloucester Road, Arataki, Mt Maunganui, Tauranga; and
- a freehold interest in 5.4022 hectares of land at 1381 Dominion Road, Mt Roskill, Auckland; and
- a freehold interest in 4.8129 hectares of land at 1, 2 and 5 Longford Park Drive, Papakura, Auckland; and
- a freehold interest in 1.8773 hectares of land at 12-30 Edgewater Drive, Pakuranga, Auckland; and
- a freehold interest in 10.1014 hectares of land at 66 Avonleigh Road, Green Bay, Waitakere City; and
- a freehold interest in 17.9020 hectares of land at 1 Henley Way off Guilford Drive, Paraparaumu.
Approval was also received for an overseas investment in significant business assets, being the Applicant’s acquisition of rights or interests in 100% of the shares of RVNZ Investments Limited, the value of the assets of RVNZ Investments Limited and its 25% or more subsidiaries being greater than $100m. The vendor was Existing shareholders in RVNZ Investments Limited other than FKP Limited and Macquarie Group Limited Australia (91.24%), Netherlands (8.76%). Consideration was stated as to be advised. The OIO states:
“Both Applicants presently hold (directly or indirectly) stapled securities in Retirement Villages Group (RVG), a group of stapled companies which includes RVNZ Investments Limited (RVNZI). Presently, FKP Limited holds 16.77% of RVG, (and correspondingly in RVNZI); Macquarie Investment Holdings No. 2 Pty Limited holds 10.61%; Macquarie Financial Products Management Limited holds 10.61%; Macquarie Financial Products Management Limited holds 0.79%; and Retirement Villages Group Management Pty Limited (RVGMPL), which is jointly owned by FKP Limited and Macquarie Group, holds 0.14%.
“The transaction involves three elements: FKP Limited seeks to acquire 99.1 million partly paid shares in RVNZI; RVGMPL seeks to apply fees that it is entitled to receive for advisory services to subscribe for RVNZI shares; and FKP, Macquarie Group and their associates may also acquire further shares in RVNZI over the next four years. The issue is occurring to raise funds needed to strengthen RVG’s balance sheet by repaying debt facilities that were drawn to fund the acquisition by RVG of a retirement village portfolio in Australia in November 2007. As one of the stapled entities, RVNZI is required to issue shares as a component of the stapled securities being offered”.
FKP is one of Australia’s largest property companies, with a diversified business that includes developments, retirement villages, funds management, construction and land. Australia’s Macquarie Group specialises in buying up infrastructure on a global scale, with interests in 25 companies around the world. In New Zealand it has interests in one of the country’s largest aged care groups (including some formerly owned by churches), large commercial property holdings, and minority interests in many other companies. Internationally it owns four large airports (including Sydney’s Kingsford Smith, two in Rome – in the process of being sold – and in Birmingham and Bristol in the UK) and Thames Water in the UK.
See our October 2005 commentary regarding Macquarie’s and FKP’s purchase of Metlife retirement villages (via RVNZ) as well as December 2005 commentary regarding three further purchases of Auckland rest homes. Macquarie (via Retirement Care NZ) purchased Qualcare, “one of the largest aged care operators in New Zealand, with 976 rest home and hospital beds, and 462 independent living villas and apartments” in February 2008 (see our commentary February 2008).
Decision # 200910052
UK Financial Meltdown Hits Our Shores
Her Majesty’s Treasury of the UK Government United Kingdom (except Isle of Man and the Channel Islands) (100%) has been granted approval for the overseas investment in sensitive land, being the Applicant’s acquisition of rights or interests in 84.5% of the ordinary share capital and 100% of non-voting B shares of The Royal Bank of Scotland (RBS) Group plc which owns or controls:
- a freehold interest in 0.7193 hectares of land at Porchester Road and Marengo Road Takanini; and
- a freehold interest in 50.5991 hectares of land at Hamilton International Airport, Airport Road (SH 21) Hamilton; and
- a leasehold interest in 18.8234 hectares of land at Hamilton International Airport, Airport Road (SH 21) Hamilton; and
- a freehold interest in 102.7493 hectares of land at 105, Middle Road, Rukuhia, 188 Narrows Road, Rukuhia; and
- a freehold interest in 14.8926 hectares of land at 233A-233B, 225, 231 Porchester Road, Takanini; and
- a freehold interest in 2.7215 hectares of land at Arion Road and Phar Lap Crescent, and Windfola Parkway and/or Porchester Road, Takanini.
Approval was also received for an overseas investment in significant business assets, being the Applicant’s acquisition of rights or interests in 84.5% of the ordinary share capital and 100% of non-voting B shares of The Royal Bank of Scotland Group plc, the value of the assets of The Royal Bank of Scotland Group plc and its 25% or more subsidiaries being greater than $100m. The vendor was The Royal Bank of Scotland Group plc United Kingdom (except Isle of Man and the Channel Islands) (56%), United States of America (27%), Various (17%). The asset value stated was the not too small amount of $1,243,581,000. The OIO states:
“Consent was granted on 28 November 2008 for the Applicant to acquire up to 58.1% of the ordinary share capital and £5billion worth of non-voting non-cumulative preference shares (preference shares) in The Royal Bank of Scotland plc. On 19 January 2009, the Applicant agreed to convert its preference shares into ordinary shares. This is intended to make available additional Core Tier 1 capital to The Royal Bank of Scotland plc. This conversion will be effected through a new offering of ordinary shares to existing shareholders on a pro rata basis. Any shares not taken up by existing shareholders will be subscribed for by the Applicant. The Royal Bank of Scotland plc participates in the Government of the United Kingdom’s Asset Protection Scheme under which the applicant will provide participating institutions with protection against credit losses incurred on one or more portfolios of defined assets. In conjunction with the Asset Protection Scheme, the Applicant will subscribe for up to £25.5 billion of non-voting B shares in The Royal Bank of Scotland plc”.
This is part of a multibillion pound bailout, by the British public, of another casualty of the global financial crisis. For those who are interested, John Lanchester’s excellent review “It’s Finished” in the London Review of Books (28/5/09) gives a thoroughly entertaining commentary on the Royal Bank of Scotland’s demise. A key nail in the RBS coffin was their purchase (as part of a consortium) of Dutch Bank ABN Amro, which you can view in our October 2007 commentary. They paid €71 billion, to trump Barclay Bank’s €66 billion bid. Problem was both bids were way over priced, and the ABN Amro takeover is now considered one of the biggest flops in corporate history! See our November 2008 commentary regarding the first stage of this massive public bailout of the RBS.
Decision # 200910058
Aussies Complete Takeover Of Hirequip Thanks To Management Sell-Out
Pall Mall Hirequip Limited Australia (100%) received approval to acquire the remaining 14.07% of the shares in Pacific Equipment Solutions Limited (PESL), (the Investment). The vendors were Senior Managers of the Hirequip Group New Zealand (100%). The consideration was deemed “confidential”. The OIO states: “The Investment will have the effect of PESL once again becoming a wholly owned subsidiary of the Applicant. Currently, the Applicant holds approximately 85.93% of PESL. The Applicant will acquire the remaining 14.07% of the shares held in PESL currently held by senior management, as a result of internal restructuring including exchanging management shareholders’ shares in PESL for units in the Tasman Secondary Trust, which holds all the shares of the Applicant”.
Pall Mall had previous acquired the original 86% in PESL from US banking giant Citigroup in September 2008. This was in the middle of the global credit crisis, so one can speculate why Citigroup sold, especially considering Citigroup had bought it only seven months earlier from Nikko Cordial, itself subject to financial scandal in Japan. Let’s pray that Pall Mall proves to be a more stable owner than the previous two. See our February and September 2008 commentaries for further details.
Decision # 200910071
US Company Wants Our Pebbles For Swimming Pool Coatings
Turley International Resources, LLC United States of America (100%) received approval to acquire rights or interests in 90% of the shares of Southern Stone & Timber Limited which owns or controls a freehold interest in 42.5274 hectares of land at Awarua Bay Road, Invercargill. The vendor was Drain (Elvin John) and Woodruff-Drain (Kimberley) New Zealand (100%). Consideration was $562,506. The OIO states:
“Southern Stone & Timber Limited (SST) acquired the relevant land on 27 June 2007. Turley International Resources, LLC (Turley) currently holds 24% of the shares in SST. SST has been established to export aggregate product to the local market and the United States of America. SST will use Turley’s knowledge and expertise to expand into Australia and Asia. Turley proposes to increase its shareholding in SST from 24% to 90% of the shares. SST’s primary activity is the extraction and processing of a variety of types of pebbles for export for the use of swimming pool coatings and floor coatings. The acquisition of the relevant land and subsequent establishment of a quarry will provide a supply of pebbles for Turley”.
Decision # 200810032
The Irish Are At It Again
In April, two further acquisitions of Southland farms by Premier Dairies Limited Ireland (100%) were approved, being:
- the acquisition of a freehold interest in 56.9696 hectares of land at North Makarewa Road, Southland. The vendor was Timothy John Wood New Zealand (100%). Consideration was $2,533,894, and
- the acquisition of a freehold interest in 32.3749 hectares of land at Pullar Road,Makarewa, Tussock Creek Southland. The vendor was Timothy John Wood New Zealand (100%) Evans Farms Limited New Zealand (100%). Consideration was $1,080,000. See commentary in March 2009 Decisions, above, concerning the buy up of Southland farms for conversion to dairying.
Decision #s 200821572 & 200821664
Mount Aspiring Hotel Sold To US Timeshare
Worldmark by Wyndham (NZ) Limited United States of America (99%), Various (1%) received approval to acquire a freehold interest in 0.3663 hectares of land at 109 Mount Aspiring Road, Wanaka. The vendor was Wanaka Resorts Limited New Zealand (100%). Consideration was stated as confidential. The OIO states: “The Applicant’s sole shareholder is Wyndham Vacation Resorts South Pacific Limited, which is the trustee and manager of Worldmark South Pacific Club (Worldmark). Worldmark is a managed timeshare investment scheme. The Applicant wishes to acquire the sensitive land and redevelop the Mount Aspiring Hotel, which has 38 units. The total tourist accommodation available to Worldmark holiday credit holders in the Wanaka area will then be around 69 – 70 units”.
Decision # 200821642
Phar Lap Isn’t The Only Kiwi Horse The Aussies Want To Claim
GH Westbury Pty Limited Australia (100%) received approval to acquire rights or interests in 50% of the shares of NZ Thoroughbred Holdings Limited which owns or controls a freehold interest in 85.3597 hectares of land at 699 & 700 – 716 Linwood Road, Te Hihi, Karaka. The vendor was BGH Trusteeship Limited and Michael Tololi as trustees of the Tololi Services Trust New Zealand (100%). Consideration was $5,000,500. The OIO states:
“The acquisition will provide the Applicant with a presence in the New Zealand thoroughbred industry and access to one of New Zealand’s largest sire rosters. This is likely to result in:
(i) the breeding of using stallions and broodmares sourced from both New Zealand and Australia;
(ii) the development of the New Zealand export market of thoroughbreds to foreign stables and auction houses”. The Tololis’ had previously sold 81 hectares at Karaka to Korean interests in 2003.
Decision # 200910027
A New Otago Gold Rush?
Oceana Gold (New Zealand) Limited Australia (59.9%), Canada (28.91%), New Zealand (8.28%), Various (2.91%) received approval to acquire a freehold interest in 575.4029 hectares of land at 2338 Hartfield Road, Hyde, Otago. The vendor was Lesley Kapua-O-Terangi Peddie (1/2 share) & Lesley Kapua-O-Terangi Peddie, John Piripi Peddie & Roger Norman Macassey (1/2 share) New Zealand (100%). The consideration stated as confidential. The OIO states:
“The Applicant is New Zealand’s largest gold producer, engaged in exploration, extraction and processing of gold ore in New Zealand. It owns and operates the Macraes Mine in Otago and the Globe Progress Mine in Reefton. The land being acquired complements the Applicant’s current land holdings at Macraes, and in the long term the Applicant intends to extend its mining operations to involve part of the subject land. To secure that part of the land it is necessary to purchase the whole property.
“The Applicant will lease out the land for farming purposes for some years before beginning to mine any of the land. The overseas investment transaction has satisfied the criteria in section 16 of the Overseas Investment Act 2005. The ‘substantial and identifiable benefit to New Zealand’ criteria were satisfied by particular reference to the following factors:
Overseas Investment Act 2005
- 17(2)(a)(iii) – Increased export receipts
- 17(2)(a)(iv) – Added market competition/Productivity
- 17(2)(a)(vi) – Increased processing of primary products
- 17(2)(b) – Indigenous Vegetation/Fauna
- 17(2)(c) – Trout, salmon, wildlife and game
- 17(2)(d) – Historic Heritage
- 17(2)(e) – Walking Access”.
Time will tell whether Oceana’s commitment to the environmental and historical attributes of the area will be maintained. Their human rights record isn’t that flash however, according to the Business & Human Rights Resource Centre, a Website dedicated to tracking the positive (are there any?) and negative impacts of over 4000 companies worldwide. OceanaGold operates the Macraes and Reefton goldfields here in New Zealand.
Decision # 200910032
Other April Decisions
Kenmill Pty Limited Australia (99%), Various (1%) received approval to acquire:
- a leasehold interest in 0.5665 hectares of land at 30 Hunters Park Drive, Three Kings, Auckland; and
- a freehold interest in 0.5665 hectares of land at 30 Hunters Park Drive, Three Kings, Auckland.
The vendor was Valad Funds Management Limited Australia (98.52%), United Kingdom (except Isle of Man and the Channel Islands) (1.22%), Various (0.26%) Valad Property Trust Australia (98.52%), United Kingdom (except Isle of Man and the Channel Islands) (1.22%), Various (0.26%) Consideration was $17,538,775. The OIO states:
“This Application involves an international transaction between two Australian parties (Kennards and Valad) restructuring a joint venture to enable Kennards to acquire all of the minority interests. The joint venture business operates self storage facilities using two entities – KVSI Holdings Trust (KHT) and KVSI Holdings Pty Limited (KHPL). Kennards Storage Management Pty Limited, a related company will continue to manage the sensitive land and all the other storage facility sites owned by the Applicant on completion of the transaction”. See April and May 2008 decisions re other property deals involving these parties.
Decision # 200821666
Woollaston Estates Holdings Limited United States of America (79.84%), New Zealand (20.16%) received approval to acquire a freehold interest in 10.0396 hectares of land at 513 Main Road, Hope, Nelson. The vendor was Phillip Tosswill Edmond Woollaston New Zealand (100%). Consideration was $1,080,000. As with a similar decision in March, the OIO states: “The subject property will be used primarily for growing grapes for the production of Sauvignon Blanc. The acquisition will give rise to economies of scale in the viticultural operations of the Applicant”.
Decision # 200910002
Mauro Balzarini Italy (100%) received approval to acquire a freehold interest in 7.4035 hectares of land at Elysium Way, Oliver’s Ridge, Queenstown. The vendors were Campbell James Farrell and Angela Cochran-Farrell and Robert Leslie Farrell, Susan Spenser Farrell and John Woolley as trustees of the RL and SS Farrell Trust New Zealand (100%). Consideration was $5,500,000. The OIO states:
“The Applicant has business dealings in New Zealand through Wellard Group Holdings Pty Limited’s subsidiary, Wellard NZ Limited, which requires him to spend approximately two months of each year in New Zealand. The Applicant intends to establish a residence in New Zealand in order to further his business interests here. Wellard Group Holdings Pty Limited’s intention is to develop its New Zealand exporting business, with a focus on the export of breeding cattle, meat cattle and sheep. It views New Zealand as strategically important as New Zealand produces agricultural products that are in high demand throughout the world. Wellard Group Holdings has built a very successful business in Australia and intends to replicate this in New Zealand”.
Decision # 200910049
And finally for April, OIO approval has been given for the overseas investment in sensitive land, being Bente Christine Ongkiehong & Johannes Rein Roberti Netherlands (100%) acquisition of a freehold interest in 51.9889 hectares of land at 732 Otaki Gorge Road, Te Horo. The vendor was Rimu Park Lodge Limited New Zealand (100%). Consideration was $1,010,000.
Decision # 200910078
Summary Statistics April 2009
All investments
| April 2009 | Jan-Apr 2009 | Jan-Apr 2008 | |
|---|---|---|---|
| Number of approvals | 13 | 55 | 35 |
| Net Investment $ | 29,673,919 | 78,251,024 | 203,432,807 |
| Gross value of consideration | 47,570,520 | 1,827,186,460 | 2,340,496,549 |
| Asset Value | 1,791,634,000 | 11,160,999,858 | N/A |
Freehold land approved for sale
| April 2009 | Jan-Apr 2009 | Jan-Apr 2008 | |
|---|---|---|---|
| Number of approvals | 12 | 49 | 26 |
| Net land area (ha) | 813 | 12,017 | 1,250 |
| Gross land area (ha) | 1,078 | 196,941 | 5,689 |
Other interests in land approved for sale (for example leases and crown pastoral leases)
| April 2009 | Jan-Apr 2009 | Jan-Apr 2008 | |
|---|---|---|---|
| Number of approvals | 2 | 10 | 9 |
| Net land area (ha) | 0 | 916 | 92 |
| Gross land area (ha) | 19 | 90,630 | 10,258 |
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.