Foreign investment in Aotearoa/New Zealand
Overseas Investment Office – September 2009 Decisions
Overseas-owned Joint Venture Splits 27,000 Hectare Forest between Them
The most significant approval in September was the dissolution of a partnership that owns 27,141 hectares of land near Dargaville. Specifically, in two separate decisions, Mangakahia Forest Land Limited United States of America (40%), Saudi Arabia (23.5%), Denmark (21%), Australia (6%), Switzerland (5%), Various (4.5%) (a wholly-owned subsidiary of GFP Mangakahia Forest Venture Limited which is ultimately wholly-owned by institutional investors in the Global Timber Investors Fund Number 6) and NZ Forest Products Limited Canada (32.6%), United States of America (31.23%), Australia (22.08%), Norway (14.09%) received approval to acquire up to 100% of the forestry estate and other assets of the Mangakahia Joint Venture, including a freehold interest in 27,140.91 hectares of land near Dargaville (which they previously owned under a joint venture). The asset value was stated as “confidential”, however by comparing the OIO decision summary tables for August and October 2009, the assets value can be deduced as $161,416,000. The vendor was Mangakahia Forest Limited and Mangakahia Forest Management Limited Canada (16.3%), United States of America (35.61%), Australia (14.04%), Saudi Arabia (11.75%), Denmark (10.5%), Norway (7.05%), Switzerland (2.5%), Various (2.25%) – the joint venture. The OIO states:
“GFP Mangakahia Forest Venture Limited (MFVL) and NZ Forest Products Limited (NZFP) each hold a 50% interest in the Mangakahia Joint Venture which owns the forestry estate. Each of MFVL and NZFP holds its 50% interest in the Joint Venture by holding 50% of the shares in Mangakahia Forest Limited (MFL) which owns the land for the Joint Venture and 50% of the shares in Mangakahia Forest Management Limited (MFML) which is the management company for the Joint Venture and holds all of the other assets including the trees on trust for, and as agent for the Joint Venture parties.
“The joint venture parties have agreed to dissolve the Mangakahia Joint Venture to enable them to manage their interest independently thus freeing their investment from the constraints inherent under Joint Venture ownership. Pursuant to a Partition Agreement the parties propose to unwind the Joint Venture and divide the land and assets comprising the Forest Estate into four approximately equal units. Both the Applicant and NZ Forest Products Limited will each acquire two units being approximately 50% of the Joint Venture assets. As at the date of this application it has not yet been established which units of the Forest Estate will be acquired by the Applicant, therefore the Applicant seeks consent to acquire up to 100% of the land in the Forest Estate”.
See our March 2002 commentary regarding the original sale of a 50% interest in this land by Shell Forestry to UBS Mangakahia Forest Venture Limited. Ultimate ownership of NZ Forest Products’ 50% share changed hands in 2006 when Hancock Natural Resource Group, Inc of the USA received OIO approval to acquire the Carter Holt Harvey forest estates from Carter Holt Harvey Limited, owned by New Zealand’s richest man, Graeme Hart, (see our October 2006 commentary for details).
Hancock Natural Resource Group is based in Boston, with approximately $US10 billion of forestry and farmland assets under management in the United States, Canada, Australia, NZ and Brazil. Hancock is owned by Manulife Financial Corporation, the world’s fifth largest insurance company and one of the 100 largest companies on the Forbes 500 list, making it the second-largest Canadian company. See our previous commentaries for May 2004, September 2005 and March 2009 regarding Hancock’s other purchases of forests and/or cutting rights here.
It remains to be seen whether splitting ownership of this forest will help resolve a number of environmental issues in the area. Neighbouring farmers to this forest have ongoing concerns regarding environmental issues including waterway pollution, hill erosion, weed infestation, and broken boundary fences. For a more detailed commentary on this, see “Forestry frustrates farming neighbours“, an article by Hugh Stringleman online.
Decision # 200920018
New Asian Owners For NZ King Salmon?
Evergreen Holdings Limited Malaysia (100.0%) received approval to acquire rights or interests in 52% of the shares of New Zealand King Salmon Investments Limited which owns or controls: a freehold interest in 9.17 hectares of land at 367 Pupu Valley Road, Takaka, Nelson; and a freehold interest in 7.85 hectares of land at Beachcroft Rd, Tent Burn, Canterbury; and an overseas investment in significant business assets, being the Applicant’s acquisition of rights or interests in 52% of the shares of New Zealand King Salmon Investments Limited, the value of the assets of New Zealand King Salmon Investments Limited and its 25% or more subsidiaries being greater than $100m. Consideration however was only $50m with the vendor being Oregon Group Limited Singapore (80%), Hong Kong (20%). The OIO states: “For commercial reasons, the vendor has decided to divest itself of this investment. The proposed investment by the Applicant will result in the current jobs being retained as the investment in the salmon farming interests of the target company are considered to be a good long term investment for the Applicant”.
I wonder what those commercial reasons were, given that $50m was paid for assets worth over $100m. Perhaps Evergreen is also owned by the Tiong family? According to NZ King Salmon’s Website, the company is a “subsidiary of Evergreen Holdings Ltd in partnership with Direct Capital Ltd…. The Company is ultimately owned by the Tiong Group”. See our commentaries for September 1995 and February 1996 regarding Oregon’s original purchase of NZ King Salmon. Oregon Group Ltd is owned by the Tiong family, one of Malaysia’s most powerful and wealthy families. They also own Ernslaw One which is the fourth largest forestry owner in Aotearoa, controlling approximately 100,000 hectares.
Decision # 200920008
Contact Buys Farm To Ensure Transmission Easement
Contact Energy Limited Various (52.72%), Australia (23.59%), New Zealand (14.21%), United States of America (6.33%), United Kingdom (3.15%) received approval to acquire a freehold interest in 637.55 hectares of land at 316 Allen and Eyre Rd, Onewhero, South Auckland. The vendors were Peter Woodward Mandeno, Thomas Graham Mandeno and Dennis James Munn as trustees of The PW Mandeno Family Trust New Zealand (100%); consideration was kept confidential. The OIO states:
“Contact proposes to purchase the land in order to progress the Hauauru ma raki wind farm project (Project). The Project is one of a number of renewable energy initiatives being pursued by Contact, and will increase Contact’s renewable generation capacity. Contact requires the land in order to register an easement for the transmission line that will link the wind farm to the national grid”. For details on other recent land purchases by Contact in relation to the establishment of a wind farm, see October and November 2008 and February 2009.
Decision # 200920012
Taylors Is Now Spotless
Spotless Services (NZ) Limited Australia (59%), Various (39%), United Kingdom (2%) received approval to acquire rights or interests in up to 100% of the shares of Taylors Group Limited which owns or controls a leasehold interest in 2.53 hectares of land at 1A Carrington Road, Pt Chevalier, Auckland. Consideration was stated as $18,584,139, the vendors were existing shareholders of Taylors Group Limited other than Spotless Services (NZ) Limited New Zealand (100%). The OIO states: “The Applicant currently owns 66.01% of the shares of Taylors Group Limited (Taylors), which is a provider of laundry and related services to the healthcare, hospitality and industrial/commercial sectors of New Zealand business. The proposed acquisition will allow the Applicant to manage the Taylors’ business in a more simplified and integrated manner”.
Shareholders in Taylors (other than Spotless) were not so keen to sell however. Spotless’ initial offer of $2.08 a share in August 2009 was raised to $2.25 a month later, and the deadline for acceptances was extended twice. In November 2009, they had reached over 90% acceptances, announcing their takeover of Taylors unconditional. Spotless is a laundry, hospitality and cleaning contractor. Taylors is a laundry supplier to the health and hospitality industries.
Decision # 200920055
Westbury Stud Now Part Of The Harvey Norman Stable
GH Westbury Pty Limited Australia (100%) received approval to acquire rights or interests in 100% of the shares of NZ Thoroughbred Holdings Limited (NZTHL) which owns or controls: a freehold interest in 64 hectares of land at 700-716 Linwood Road, 20 Kidd Road, Te Hihi, Karaka; and a freehold interest in 21.37 hectares of land at 699 Linwood Road, Te Hihi, Karaka. The vendors were Michael Tololi and Nominees and Trustees (No 1) Limited as trustees of the Tololi Services Trust New Zealand (100%): consideration was $1 million, in other words, a fire sale! As the OIO states:
“In April 2009, consent was granted for the Applicant to acquire 50% of the shares of NZTHL. 50% of the shares of NZTHL remained with the Vendor. Receivers have now been appointed for the Vendor. The Investment will provide the Applicant with a continued presence in the New Zealand thoroughbred and horse breeding industry. It will continue to provide the Applicant access to one of New Zealand’s largest sire rosters; enable the production of yearlings using stallions and broodmares sourced from both New Zealand and Australia; develop the New Zealand export market of thoroughbreds to foreign stables and auction houses; and position the Applicant to take advantage of the projected growth in the New Zealand thoroughbred industry. With the Vendor in receivership these opportunities could be lost. The Investment allows the Applicant to assume full control of the stud where the Vendor is unable to meet its obligations”.
GH Westbury is controlled by one Australia’s’ wealthiest men, Gerald Harvey of Harvey Norman fame. As reported by Greg Ninness in the Sunday Star-Times on 1/11/09: “Westbury Stud, the prestigious South Auckland stud farm established by Rich Lister Eric Watson, has been bought by Australian retail magnate Gerald Harvey, founder of the Harvey Norman chain. Harvey is ranked Australia’s 13th richest person with an estimated net worth of $A870 million ($NZ1.1 billion). He is also one of Australia’s best known racehorse owners but Westbury is believed to be his first foray into this country’s bloodstock industry. Westbury, at Karaka on the outskirts of Auckland, is one of the country’s most lavishly appointed stud farms and was regarded as one of Watson’s trophy investments.
“He sold the 85ha property to NZ Thoroughbred Holdings, a company owned by the family interests of property developer Michael Tololi, in August last year. But the recession has not been kind to Tololi and by the beginning of this year he had started selling down assets to reduce his debt, and by March some of his horse breeding interests were being tipped into receivership. In April the Overseas Investment Office gave approval for Sydney-based GH Westbury Pty Ltd to acquire a 50% stake in NZ Thoroughbred Holdings for just over $5m. That company is owned by Harvey and appears to have been set up specifically to buy the stud farm.
“In August the second mortgage on the property was transferred from Watson’s company to GH Westbury. But by September receivers had been appointed to Tololi’s interest in the property and Harvey took his ownership to 100%. The acquisition means Westbury is now part of an impressive Australasian bloodstock business. Harvey’s Australian bloodstock interests are estimated to be worth $A110m. That includes three stud farms, around 1,000 horses and a major stake in Magic Millions, one of the country’s largest thoroughbred auction houses. Acquiring Westbury gives Harvey access to one of this country’s largest sire rosters, and will enable him to develop a breeding programme sourcing horses from both sides of the Tasman. Their progeny will then be exported around the world”.
Decision # 200920032
Paratiho Farms Now Owned By Ex British Banker
Paratiho Limited United Kingdom (100%) received approval to acquire a freehold interest in 769.05 hectares of land at 545 Waiwhero Road & Rosedale Road, Upper Moutere, Nelson. The vendor was Sally Mitchell Hunt New Zealand (100%); consideration was $15,075,000. The property is known as Parahito farms and was originally on the market in 2003 for $30m. The shareholders of the Paratiho Ltd (a former British banking executive and his wife, Sir Keith and Lady Whitson) have sold their former home in Selkirk, Scotland and are currently in transition, moving their possessions to New Zealand. They intend to reside in New Zealand at this property indefinitely and reopen its exclusive lodge to paying guests. Sir Keith is probably not short of dough. He had a distinguished career with the HSBC Group, the world’s largest independent bank and retired as chief executive 6 1/2 years ago. In other words he cashed up just as the seeds of the 2008 credit crunch were beginning to sprout. Sally Hunt and her late husband Robert were originally from the US and purchased the property in the 1990s.
Decision # 200920034
More Forestry Deals
PF Olsen Tisa Pty Limited as the corporate trustee of the Australasian Timberland Fund II Australia (85.8%), United Kingdom (13.2%), Germany (1%) received approval to acquire a freehold interest in 302 hectares of land at Waima Forest, Waoku Road, Northland. The vendor was RR Waiohau Limited United States of America (100%), the consideration was stated as confidential. See our commentary in August 2003 for details of the vendor’s original purchase of this property.
Decision # 200920005
In another decision, Craigpine Timber Limited Australia (100%) was given approval to acquire a freehold interest in 185.06 hectares of land at No 3 RD, Winton, Taringatura, Southland for just $393,750 (or just over $2,000 per hectare!) from Hugh Charles Allen and Marilyn June Allen New Zealand (100%). Craigpine already has cutting rights to this property (known as Monovae Forest), buts wishes to secure “long-term future timber supplies” for it’s sawmill in Winton. At just $2k per hectare, who can blame them! See our commentaries for March and November 1999, April 2000, May 2007 and March 2008 for details of other Craigpine purchases in Southland.
Decision # 200920030
Other September Decisions
Christina Lynn Klepp and Craig Reginald Thomas Canada (100.0%) received approval to acquire; a freehold interest in 7.5 hectares of land at 19 Musson Drive, Waiheke Island; and a freehold interest in 7.85 hectares of land at 129 Carsons Road, Waiheke Island. The vendor was Gillian Stephanie Pattison New Zealand (100%) and Ridgeview Estate Limited New Zealand (100%), the purchase price was $5,360,000. The property is currently a failing vineyard and function business, which the applicants intend to revive.
Decision # 200910130
Irvin Kessler United States of America (100%) received approval to acquire a freehold interest in 57.08 hectares of land at 298 Farndon Rd, Clive, Hawke’s Bay. The vendors were Daniel Bearsley, Marilyn Bearsley and Kevin Bearsley as trustees of the Bearsley Family Trust New Zealand (100%): the consideration was $3,656,250. Kessler intends to convert the property from maize to a pip fruit orchard.
Decision # 200920013
Fletcher Concrete and Infrastructure Limited New Zealand (66.11%), Australia (33.56%), Various (0.33%) received approval to acquire a freehold interest in 0.15 hectares of land at Hewlett Street, Whangarei, for $152,021 from Whangarei District Council New Zealand (100%). Fletchers already own land adjoining the Hewlett Street property.
Decision # 200920016
EPF Limited Austria (100%) received approval to acquire a freehold interest in 9.9 hectares of land at 176 Kina Peninsula Road, RD1, Upper Motueka, Nelson. Consideration was $4.6 million; the vendors were Linley Thelma Taylor, John Stuart Taylor, Alain David Swain and Barbara Joyce Mackay as trustees of the John and Linley Taylor Family Trust New Zealand (100%). The property contains an olive grove which EPF intends to continue and expand.
Decision # 200920020
John Thomas Wilson United Kingdom (100%) received approval to acquire a freehold interest in 163.10 hectares of land at 210 Tavistock Road, Waimate. The vendors were Roderick Thomas Hayman, Nicola Jane Hayman and MHS Trust Management Limited as trustees of the Opiro Family Trust New Zealand (100%); consideration was $2,786,625. Wilson intends to reside in New Zealand indefinitely, and continue to operate the land as a farming unit by leasing it out for dairy support purposes.
Decision # 200920024
Bunnings Limited Australia (99.43%), New Zealand (0.36%), Various (0.21%) received approval to acquire a freehold interest in 7.64 hectares of land at 2182 East Coast Rd, Silverdale. The vendor was The New Zealand Guardian Trust Company Limited Australia (100%); consideration was $3,262,500. Yet another Aussie owned mega hardware store.
Decision # 200920045
And finally for September, on a more positive note, Luc Bohyn Belgium (100%) received approval to acquire a freehold interest in 30.5 hectares of land at Shell Back Rd, near Blackball, West Coast. The vendors were Trevor Johnston and Gail McLean Johnston New Zealand (100%); consideration was $393,750. The reason for my upbeat assessment of this approval is not the land sale per se, but the intended purpose for the land as stated in the approval. The OIO states:
“The purpose of acquiring the Property is to establish a kiwi crèche for the protection of the great spotted kiwi in a predator free and natural environment. This involves the construction of a special predator proof fence within an area of approximately 13.5 hectares of the Property. The Applicant is working with the Paparoa Wildlife Trust (PWT) a charitable conservation organisation that was formed primarily to establish and maintain recovery programmes for the great spotted kiwi and blue duck on the West Coast. PWT works closely with the Department of Conservation in fulfilling its objectives. PWT will lease the kiwi crèche land from the Applicant to enable it to carry out its main objective of protecting the great spotted kiwi”. At least one overseas purchaser of a piece of “God’s own” has praise worthy intentions for their purchase!
Decision # 200920040
Summary Statistics September 2009
Asset value
| Sept 2009 | Jan-Sept 2009 | Jan-Sept 2008 | |
|---|---|---|---|
| Number of approvals | 18 | 122 | 101 |
| Net Investment $ | 65,235,310 | 819,556,344 | 1,206,255,739 |
| Gross value of consideration | 128,686,655 | 7,522,349,615 | 5,106,784,725 |
| Asset Value | Confidential | Confidential | 175,758,000 |
Freehold land approved for sale
| Sept 2009 | Jan-Sept 2009 | Jan-Sept 2008 | |
|---|---|---|---|
| Number of approvals | 17 | 105 | 75 |
| Net land area (ha) | 3,147 | 17,631 | 10,581 |
| Gross land area (ha) | 59,110 | 259,638 | 27,727 |
Other interests in land approved for sale (for example leases and crown pastoral leases)
| Sept 2009 | Jan-Sept 2009 | Jan-Sept 2008 | |
|---|---|---|---|
| Number of approvals | 1 | 15 | 24 |
| Net land area (ha) | 2 | 1,121 | 14,452 |
| Gross land area (ha) | 3 | 90,715 | 25,897 |
Applications denied
| Sept 2009 | Jan-Sept 2009 | Jan-Sept 2008 | |
|---|---|---|---|
| Number of declines | 0 | 0 | 3 |
| Total proposed purchase price ($) | 0 | 0 | 4,632,296,257 |
| Total proposed area to be acquired (ha) | 0 | 0 | 3,101 |
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.