Foreign investment in Aotearoa/New Zealand
Overseas Investment Office – February 2015 Decisions
Aussies Sell Goodman Fielder To Asian Tigers
A busy month at the OIO. The most significant approval in terms of notified value this month was W Singapore Holdings Pte Ltd Wilmar International Limited, Singapore (50%), and First Pacific Company Limited, Hong Kong (SAR) (50%) receiving approval for the acquisition of rights or interests in up to 100% of the shares of Goodman Fielder Limited which owns or controls:
- a freehold interest in approximately 23.6 hectares of land at 275 Ahuroa Road, Makarau; and,
- a freehold interest in approximately 0.9 hectares of land at 248 East Tamaki Road, Auckland.
Approval was also received for an overseas investment in significant business assets, being the acquisition of rights or interests in up to 100% of the shares of Goodman Fielder Limited, the value of the assets of Goodman Fielder Limited and its 25% or more subsidiaries being greater than $100m. Asset value was stated at $1,278,000,000; the vendors were the existing shareholders of Goodman Fielder Limited, Australian Public (80.1%), Wilmar International Limited, Singapore (10.1%), and First Pacific Company Limited, Hong Kong (SAR) (9.8%). The OIO states: “The Applicant plans to expand the distribution of Goodman Fielder’s products into potential new markets in the Asia-Pacific region utilising its existing distribution/sales network. The Applicant also plans to accelerate the implementation of several key projects aimed at increasing the efficiency of Goodman Fielder’s New Zealand operations”. Agribusiness Website FarmWeekly reports on this deal (26/2/15):
“Goodman Fielder shareholders overwhelmingly said yes to the $1.3 billion Asian takeover proposal offered by Wilmar and First Pacific. Singapore oils giant Wilmar International and First Pacific, a Hong Kong investment company, first flagged their bid last April. The initial joint bid of 65 cents a share was knocked back by GFF as ‘opportunistic’. A 70c/share bid was eventually watered down to 67.5c in July after four weeks of due diligence revealed the need for significant capital investment and asset write-downs. More than 99% of votes cast at the meeting in Sydney today were in favour of the takeover offer.
“With its iconic brands Crisco and Gold’N Canola, food giant Goodman Fielder (GFF) is the largest canola, soybean and sunflower oil supplier to Australian retailers, while Wilmar has cornered the market in imported packaged oils which supermarkets sell under their private labels. GFF Chairman Steve Gregg said the decision to recommend the sale to shareholders was not taken lightly. ‘We are very mindful of the iconic status of Goodman Fielder across Australia and New Zealand and the rich history it enjoys in this region’, he said. ‘While in one respect it will be sad to see the company change from public shareholding to private ownership, it is important to recognise the significant opportunity that can come from this change’.
“The Overseas Investment Office in New Zealand and the Chinese regulator – the Anti-Monopoly Bureau of the Ministry of Commerce of the People’s Republic of China (MOFCOM) – gave their approval earlier this month, clearing the path after the Australian Competition and Consumer Commission announced last September it would not oppose the joint acquisition. Mr Gregg said the transaction was ‘an attractive value outcome’ for shareholders and was confident the deal would also benefit employees, suppliers and customers.
“The joint bidders’ distribution networks were of particular value to GFF, Mr Gregg said, with the Wilmar distribution network covering more than 50 countries, and First Pacific providing significant access across Indonesia through its 50.1% ownership of Indofood. Wilmar and First Pacific have material adverse change clauses attached to their 67.5 cent a share offer, which enables the bidders to walk away if recurring earnings before interest and tax falls $30 million or the value of net assets falls by $100 million in 2015. GFF reiterated its support for the $1.3b bid after delivering a flat first-half profit result earlier this month, with underlying net profit slipping 1% to $29.7 million as cheaper milk and wheat costs countered falling prices in bread and spreads”.
Aussies Buy 2,000 Hectare Te Rata Forest, Plus Another
QIC Strategy Timber No.1 Limited QIC Limited, Australia (100%), has received approval for the acquisition of a freehold interest in approximately 2,007 hectares of land at Tarndale Road, Whatatutu, Gisborne (Te Rata Forest). Consideration was “withheld under s(9)(2)(b)(ii) of the Official Information Act”; the vendor was Ellmers Family Trustee Limited, New Zealand (100%). The OIO states: “The Applicant was formed recently to undertake investment and funding of timberland and forestry related acquisitions in New Zealand. The Applicant intends to harvest the existing trees and then replant Te Rata forest for the ongoing production of timber”.
In a second approval, QIC Strategy Timber No.1 Limited QIC Limited, Australia (100%), has received approval for the acquisition of a freehold interest in approximately 346 hectares of land at Waimiha Road, Mangapehi. The vendor was RH Tregoweth Limited, New Zealand (100%); consideration was again “withheld under s(9)(2)(b)(ii) of the Official Information Act”. The OIO simply states: “The Applicant is acquiring the land as a timberland investment and will replant the existing Forest upon harvest”. QIC is the Queensland Investment Corporation, a $100 billion Australian superannuation manager.
English Buy Mt Isthmus Station
In another significant land sale, New Zermatt Properties Limited, Richard Anthony Magides, United Kingdom (100%), received approval for the acquisition of a freehold interest in approximately 2,944 hectares of land at Mt Isthmus Station, Makarori-Hawea Road, Hawea. The vendor was Glen Dene Limited, Richard Burdon, Jeremy Burdon and Lesley Burdon, New Zealand (100%); consideration was “withheld under section 9(2)(b)(ii) of the Official Information Act”.
The OIO states: “The Applicant plans to construct and establish a luxury farm and wilderness lodge and ancillary tourism activities on the land. The Applicant will lease the majority of the land back to the Vendor so it can continue its farming operations. This investment follows earlier investments by the Applicant which also involved the development of luxury accommodation”. Mr Madgides, a former hedge fund manager, made his fortune with Stephen Diggle, on whom we commented earlier (see January Decisions above re Vulpes Agricultural Land Investment Company). Together they owned Artradis Fund Management, which was highly successful for most of its existence, thanks to a strategy of using options to profit from market volatility. The Artradis funds performed particularly well when markets were going down and posted annual profits as high as 57% during the global financial crisis when the vast majority of funds recorded double-digit losses.
Messrs Magides and Diggle decided to quit while they were ahead and shut Artradis in 2011 after a couple of poorly performed years threatened to unwind their multi-billion dollar gains. Like Diggle, Magides appears to be diversifying his gains from the Global Financial Crisis into assets which are more permanent. See our May 2012 commentary for details of Magides’ purchase of a Bay of Islands vineyard, our July 2013 commentary for details of Magides’ purchase of the 2,700 hectare Ben Avon high country station, and our August 2014 commentary of a further Queenstown subdivision purchase. In September 2014 he reportedly paid $8m for a 970m2 penthouse in the Metropolis apartment building in downtown Auckland.
French Take 25% Stake In Pokeno Milk Processing Plant
Danone Asia Baby Nutrition Pte Ltd, Danone SA (formally Groupe Danone SA), France (100%). has received approval for the subscription of up to 25% of the share capital of Yashili International Holdings Limited; the asset value was stated at approximately $170,000,000. The OIO states: “The Applicant has been granted consent to acquire up to 25% of the share capital of Yashili International Holdings Limited (‘Yashili’) by way of a share subscription. Yashili is currently constructing a milk processing plant in the Waikato town of Pokeno. The plant will manufacture paediatric milk powder products”.
Danone is a huge French transnational – dominant in yoghurt, packaged water, cereal biscuits and snacks. See our August 2002 commentary for details of its purchase of Frucor Beverages including Fresh Up, Just Juice, McCoy, NZ Natural, Citrus Tree, and V brands and our July 2014 commentary for details of Danone’s purchase of Auckland based infant formula contract manufacturer Sutton Group. See our March 2013 and February 2014 commentaries for details of Yashili’s original investment in the Pokeno milk processing plant.
Blackstone Buys Orica
Chemstralia Pty, Ltd The Blackstone Group LP, United States of America (100%), received approval for the Applicant’s acquisition of rights or interests in up to 100% of the shares of Orica Chemicals Holdings Pty Limited, the value of the New Zealand assets of Orica Chemicals Holdings Pty Limited and its 25% or more subsidiaries being greater than $100m. The vendor was Orica Investments Pty Limited Orica Limited, Australia (100%). The asset value was $167,443,951.
The OIO states: “The Applicant is an investment vehicle for a fund managed by the Blackstone Group. Orica Investments Pty Limited is ultimately owned by Orica Limited, an ASX listed provider of mining services and general chemicals that has operations in New Zealand”. According to Wikipedia, Blackstone is one of the largest private equity groups in the world. It specialises in private equity, real estate, and credit and marketable alternative investment strategies, as well as financial advisory services, such as mergers and acquisitions (M&A), restructurings and reorganisations, and private placements. Blackstone’s private equity business has been one of the largest investors in leveraged buyout transactions over the last decade, while its real estate business has actively acquired commercial real estate. Since its inception, Blackstone has completed investments in such notable companies as Hilton Worldwide, Equity Office Properties, Republic Services, AlliedBarton, United Biscuits, Freescale Semiconductor and Travelport.
Chinese Take Controlling Stake In Martin Jetpack
KuangChi Science Limited, China Public (approximately 42.1%), New Horizon Wireless Technology Limited, China, People’s Republic of (33.3%), World Treasure Global Limited, Hong Kong (SAR) (18.8%), and Hong Kong Public (approximately 5.8%), received approval for the acquisition of rights or interests in up to and including 57.21% of the issued share capital of Martin Aircraft Company Limited when aggregated together with the securities held by the Applicant’s associates, the value of the assets of Martin Aircraft Company Limited and its 25% or more subsidiaries being greater than $100m.
The vendors were existing shareholders of Martin Aircraft Company Limited, New Zealand Public (41.2%), Glenn Neil Martin, New Zealand (24.2%), various overseas persons (18.9%) and Australian Public (15.7%); asset value was stated at over $100,000,000. The OIO simply states: “The Applicant is acquiring shares in Martin Aircraft Company Limited to support the development of the Martin Jetpack as it goes to market”. Stuff.co.nz summarised the deal (13/2/15):
“Christchurch’s Martin Aircraft, developer of the ‘jetpack’ flying machine, has raised $A27 million ($28.2 million) in a public offer of 67.5 million shares to commercialise the machine. A Chinese entrepreneurial investor bought most of the shares. Chief Executive Peter Coker said there were also other new investors and a ‘considerable New Zealand interest’ in the shares selling for A40c a share, discounted from an initial price of A50c… The big subscriber – for 52.5 million costing $A21m – is Chinese entrepreneur KuangChi Science. Its Chief Executive, 31 year-old Liu Ruopeng, was introduced to Martin Aircraft when he accompanied Chinese president Xi Jinping on a visit to New Zealand last November (2014).
“A deal was struck about four weeks later, leaving only $A6m to raise from other investors. As part of the deal, KuangChi will also buy up to $29m convertible notes – debt that may turn into shares later – and the two parties will form a joint venture company 51% controlled by KuangChi for future research and development. Martin Aircraft can buy KuangChi out of the joint venture later by paying it through the issue of more shares in Martin Aircraft. Martin Aircraft was founded by Glen Martin, who is selling some of his shares to KuangChi as is another key Kiwi shareholder, Wellington-based capital investor No 8 Ventures. After the offer of shares is completed, Glen Martin’s stake in Martin Aircraft will drop to 15.9% and No 8 Ventures will reduce to 19.2%, while KuangChi will hold 27.8%. With the conversion of the notes to Martin Aircraft shares later, and if Martin Aircraft buys KuangChi out of the joint venture, KuangChi would end up with 55%of Martin Aircraft. Martin Aircraft is aiming for first commercial sales of the jetpack in the third quarter next year. It is primarily marketing the jetpack as a ‘first responder’ vehicle for emergency services and, once that is successful, will work of selling it for leisure and personal use.”
Fleet NZ Ownership Restructured
Fleet Aust Pty Limited, Australian Public (36.2%), Sing Glow Investments Pte Limited, Singapore (29.9%), Clantern Holdings NV, Belgium (22.3%), Ironbridge Fund II B, Australia (5.8%) and Ironbridge Fund II A, Australia (5.8%), has received approval for the acquisition of rights or interests in 100% of the shares of Fleet NZ Limited, the value of the assets of Fleet NZ Limited and its 25% or more subsidiaries being greater than $100m. The vendors were existing shareholders of Fleet NZ Limited, Sing Glow Investments Pte Limited, Singapore (43%), Clantern Holdings NV, Belgium (32.1%), Ironbridge Fund II B, Australia (8.3%), Ironbridge Fund II A, Australia (8.3%) and Australian Public (8.2%). Consideration was $69,793,559. The OIO states: “The Applicant wishes to purchase Fleet NZ Limited as part of an internal reorganisation. There is significant overlap between the shareholders of the Applicant and Fleet NZ Limited. Fleet NZ Limited runs a passenger vehicle and light commercial vehicle fleet management business”.
Upmarket Lodges Planned For Historic Pa Site In Taupo
In a somewhat surprising approval, Yang Chung Roy Chen and Yuk Lynn Chen Woo, Hong Kong (SAR) (100%), received approval for the acquisition of a freehold interest in approximately 2.4 hectares of land at 24 & 26 Short Street, Taupo. The vendor was Southland Building Society New Zealand (100%); consideration $3,800,000. The OIO states: “The Applicant intends to build four luxury lodges on the property. Two of these will be used for a high-end lodge accommodation business, with the other two lodges intended for personal use. The Applicant will donate and relocate one of the existing houses on the land to a New Zealand charity and also protect, and give limited access to the historic pa site located on the land”.
TR Truck Rental Group To Expand
CHAMP Ventures 7 Management Pty Limited for and on behalf of CV7A Investment Trust, and CHAMP Ventures Investments Trust No. 7C, Australian Public (43.6%), North American Public (21.3%), various (12%), Malaysian Public (10.5%), Japanese Public (7.4%) and Swiss Public (5.3%), received approval for the acquisition of rights or interests in up to 32.5% of the shares of TR Group Limited, which owns or controls:
- a freehold interest in approximately 6.6087 hectares of land at 791-793 Great South Road, Penrose, Auckland; and
- a leasehold interest in approximately 3.3256 hectares of land at 781, 783 & 787 Great South Road, Penrose, Auckland.
Approval was also received for an overseas investment in significant business assets, being the Applicant’s acquisition of rights or interests in up to 32.5% of the shares of TR Group Limited, which has assets valued at over $100m. The Investment comprises a combination of shares issued to the Applicant by TR Group Limited, and shares sold to the Applicant by Newbury Holdings Limited; Consideration was “withheld under section 9(2)(b)(ii) of the Official Information Act”. The OIO states: “TR Group, together with its subsidiaries, operates a New Zealand truck, trailer, bus and coach leasing and rental business. The investment by the Applicant will enable TR Group to substantially increase its truck and trailer fleet”. See our October 2008 commentary for details of Champ’s last purchase here.
Other February Decisions
Kenneth Giles McDermott, Kathleen McDermott and Philip William Earl Donaldson as trustees of the Fair Hill Trust, United States of America (100%), received approval for acquisition of a freehold interest in approximately 5.8 hectares of land at Westbank Road, Pokororo, Motueka Valley. The vendor was John Green, Marguerite Green and Fletcher Vautier Moore Trustees Limited as trustees of the JH & MH Green Family Trust, New Zealand (100%); consideration was $702,000.
The OIO states: “The Applicant owns and operates a farm on three properties in Pokororo and Motueka, which were acquired in 2003 and 2006. The Applicant seeks to purchase this land as it is adjacent to the properties it already owns and intends to incorporate it into the existing farming operation. The Applicant considers that the additional grazing land will provide greater flexibility for the farming operation. An ecological restoration project is also intended to be undertaken on the land, including riparian fencing and restorative planting”. See our commentaries for June 2003, May 2006 and November 2006 for details of their others purchases nearby.
Triflor NZ Limited, Gerardus Franciscus Hageman, Netherlands (26.7%), Hendrikus Maria van Dam, Netherlands (26.7%), Judith Maria van Dam, Netherlands (26.6%), and Semke David Jan Gerben Riepstra, Netherlands (20%), received approval for the acquisition of a freehold interest in approximately 64 hectares of land (subject to survey) at Matai Road, Edendale, Southland. The vendor was Wairau Agribusiness Investment Limited, Susan Cullen, New Zealand (100%); consideration was $3,200,000.The OIO simply states: “The Applicant is acquiring the land to use for growing bulbs for its tulip bulb export business”. They have previously purchased 60 hectares nearby for a similar purpose, see our December 2013 commentary.
Campaign Against Foreign Control of Aotearoa,
P.O. Box 2258
Christchurch.