October 2002 decisionsSummary statisticsAll investments The pattern continues of the value of investment approved in the year to October 2002 being considerably higher than for the previous October year, but the net value (i.e. disregarding sales from one overseas investor to another) is considerably lower. By far the greatest part of the value of the approvals is for sale from one overseas investor to another.
Investment involving land Gross sales of land approved by the OIC during the years to October have increased considerably in area, though net sales are static. Refusals (above) have risen in number and value (but not in area of land), and are still a tiny proportion of the total.
One refusal: Japanese business writer wanted property for up-market JapaneseNobuyoshi Seki of Japan has been refused approval to acquire 0.23 hectares at 51 Beach Road, Castor Bay, Auckland for $3,000,000 from JR and SJ Turner of Aotearoa. Seki,
a successful business writer and lecturer and owns a publishing company in Japan, has been seeking a property to utilise as a guest/boarding house, for Japanese business people, for some time. None have been available, however he acquired two residential properties located at Torbay and Milford in February 2002 which are too small for use as guest/boarding houses.
The Applicant now intends to dispose of these two properties and acquire the subject residential property, which overlooks the Hauraki Gulf to provide bed and breakfast style accommodation for up-market Japanese travellers to New Zealand. The accommodation business will be promoted by travel agents and through the Applicant’s own business network including Japanese magazines and websites. The property will not be marketed in New Zealand.
The property contains a five bedroom dwelling and the Applicant proposes to convert the current billiard/rumpus room into a further two bedrooms. This will create six bedrooms available for guests with one bedroom for an on-site housekeeper/cook.
The OIC says only that “the application for consent has been refused as it was not considered to be in the national interest”. IAG buys New Zealand InsuranceInsurance Australia Group Limited (IAG) of Australia has approval to acquire Belves Investments Limited for $456,829,600 from Commercial Union International Holdings Limited, owned by Aviva plc of the U.K.
The Applicant, who operates in New Zealand under the State Insurance and Circle brands, proposes to acquire the commercial and domestic line of general insurance of New Zealand Insurance. The acquisition is part of a transaction to acquire Aviva’s general insurance business in Australia and New Zealand. The proposed acquisition excludes the life insurance and wealth creation businesses.
Aviva wishes to divest itself of its insurance business in Australia and New Zealand and focus on its life insurance and finance management businesses in Europe and the United Kingdom. The Applicant considers that the proposed transaction will enable it to diversify and grow its general insurance portfolio particularly through additional efficiencies and increased scope and scale.
Formed in 1859 and for many years one of New Zealand’s largest and oldest general insurers, New Zealand Insurance went through various owners. In March 1997, the OIC gave approval for its life insurance operation to be sold to Prudential Corporation Holdings Ltd of the U.K. by its then owner, General Accident Plc of the U.K. (see our commentary for that month for further details). General Accident merged with Commercial Union in 1998 to become CGU plc, and then with State Insurance’s owner, Norwich Union in 2000 to become CGNU plc. It gave itself the trendy new name of Aviva in July 2002.
IAG grew from the Australian former mutual insurance company, NRMA, after it demutualised and acquired a list of other operations, and claims it is “the largest general insurance group in Australia and New Zealand”. It acquired State Insurance from Norwich Union of the U.K. in February 2001 (see http://www.iag.com.au/pub/iag/company/index.shtml and http://www.iag.com.au/pub/iag/company/our_history.shtml).
State, the former state-owned competitor to private insurers, is now run as a business division of NRMA Insurance NZ Limited, a subsidiary of IAG. It is the largest general insurer in New Zealand. Circle is another business division of NRMA (see http://www.iag.com.au/pub/iag/about-us/brand.shtml). IAG has now added New Zealand Insurance to its trophy list as well. It bought the CGU brand of general insurance in Australasia at the same time. Westpac buys BT Financial GroupWestpac Financial Services Group Limited, owned by Westpac Banking Corporation of Australia, has approval to acquire BT Financial Group (NZ) Limited for a suppressed amount from Principal Financial Services (NZ) Inc, owned by Principal Financial Services, Inc of the U.S.A.
The acquisition is part of an Australasian takeover of the operation of parts of the former BT (Bankers Trust) financial services. Westpac announced that the total price was A$900 million. It would make Westpac the fourth largest retail funds manager in Australia with more than A$30 billion of funds under management. In Aotearoa, WestpacTrust will rank fifth with overall funds under management of $3.6 billion.
“The Iowa based Principal group, which paid A$2.1 billion for BT in 1999, will keep BT’s property trusts and direct property management capabilities. Principal will also continue to manage the international equity and fixed interest funds acquired by Westpac from BT.” (Money Management, “Westpac buys BT, but Martin to leave”, by George Liondis, 26/8/02, http://www.moneymanagement.com.au/articles/08/0c010408.asp; Westpac media release, “Westpac joins wealth management major league with BT Financial Group Acquisition”, 26/8/02, https://online.btfunds.com.au/btweb/pdf/ifa/westpac_press.pdf, http://www.westpactrust.co.nz/olcontent/olcontent.nsf/Content/26+August+2002). National Australia Bank buys Hertz Fleetlease from FordCustom Fleet (NZ) Limited, owned by National Australia Bank Limited of Australia, has approval to acquire Hertz Fleetlease Limited for a suppressed amount from Ford Motor Credit Company, owned by the Ford Motor Company of the U.S.A.
The Applicant is the specialised vehicle leasing and fleet management arm of the National Australia Bank Group of companies providing fleet leasing and fleet management services to corporate, government and small business customers. The Applicant proposes to acquire Hertz Fleetlease Limited, which has been a leading provider of operating leases for cars and commercial vehicles in New Zealand for over 10 years.
The proposed acquisition offers the Applicant a complementary opportunity given that the Applicant has more significant operations in Australia with limited operations in New Zealand, whereas Hertz Fleetlease has a reverse position. The inverse market positioning of the two organisations provides optimal cost synergy potential and scale in both Australia and New Zealand and creates a solid platform for growth in both markets.
National Australia Bank announced the deal in a media release on 30/9/02, saying it would make “Custom Fleet one of the largest operators in the Australasian fleet management industry”. However the Commerce Commission allowed the purchase (decision 478). The purchase included Hertz Fleetlease’s subsidiary in Australia, Hertz Lease Ltd.. “The purchase provides National’s Custom Fleet operation with a significant position in both the New Zealand and Australian markets.” (“National Buys Hertz Fleetlease”, http://www.national.com.au/About_Us/0,,19273,00.html.) OMV of Austria takes 10% of MauiOMV New Zealand Limited, owned by OMV Aktiengesellschaft of Austria, has approval to acquire up to 10% of the Maui Joint Venture for a suppressed amount from Shell Exploration NZ Limited, owned 60% by Royal Dutch Petroleum Company (N.V. Koninklijke Nederlandse Petroleum Maatschappij) of the Netherlands, and 40% by Shell Transport and Trading Company of the U.K.
OMV is “Austria’s largest listed industrial company and the leading Central and Eastern European integrated oil and gas group”.
“The Maui Joint Venture produces petroleum products from the Maui gas and condensate field, off the Taranaki coast, and sells these products in New Zealand and international markets.”
Shell Exploration NZ Limited “is disposing of the shareholding in terms of an undertaking given to the Commerce Commission when it acquired Fletcher Challenge Energy in 2001”. For details, see our October 2000 commentary on the OIC’s approval for that acquisition.
In a press release, Shell also announced that it was selling its 49% joint venture share in the Maari exploration permit and its potential oil field development, also to OMV.
The sale will reduce Shell’s stake in Maui to 77.5%, with Todd Petroleum Mining holding 12.5% and OMV 10%. OMV New Zealand Ltd is a subsidiary of OMV Australia Pty Ltd, ultimately owned by OMV AG of Austria (“Shell sells 10% of Maui and Maari stake”, 24/9/02, http://www.scoop.co.nz/stories/BU0209/S00153.htm).
Germinal Holdings of U.K. takes 20% of Peter Cates, seed merchantGerminal Holdings Limited of the U.K. has approval to acquire 20% of the shares of Peter Cates Limited for a suppressed amount. Germinal “processes and markets grain and seeds”, and Peter Cates Ltd is a grain and seed merchant, with whom Germinal “has established a strong trading relationship over the past ten years”.
“It is proposed that the strengthened relationship between the two parties is likely to provide Peter Cates Limited with increased marketing and export opportunities in the European markets as well as an ability to expand into Japan, China and North America.”
The purchase includes the following land in Canterbury: · 0.2031 hectares of freehold land at 146 Melcombe Street, Tinwald; · 3.1432 hectares of leasehold land comprising: · 0.6232 hectares at 1-5 and 9 Bryant Street, Tinwald; and · 2.52 hectares at State Highway 1, Rakaia Macquarie Goodman Funds Management buys Central Park, AucklandMacquarie Goodman Funds Management Limited of Australia has approval to acquire Central Park, 666 Great South Road, Auckland for $51,666,000 from Chapman Properties No. 1 Limited owned by the Jhunjhnuwala family of Hong Kong.
Macquarie Goodman “proposes to provide capital to enable the property to be further developed and improved. The Central Park development commenced in the 1980’s and the site has considerable potential for future development and scope for improvements to the existing development.”
The Jhunjhnuwala family (who are variously described as being from Singapore and Hong Kong) have been major property owners in Aotearoa. In 1995 the Press reported that their companies owned “more than $90 million in property in New Zealand” (“Offices planned”, 25/1/96, p.20). They acquired Central Park (described until then as Central Office Park) in June 1992. In September 1999 they also owned Masport Industrial Estate, Barrack Road, Panmure; Wiri Woolstore, 122 Kerrs Rd, Wiri, Auckland; and almost half of Hind Hotels International. Most are owned through their company Hind Properties Ltd. Universal Homes buys land at Te Atatu for subdivisionUniversal Homes Limited, owned 76.1% in Singapore and 23.9% by China Merchant Holdings International Limited of China, has approval to acquire 2.1 hectares at Vinograd Drive, Te Atatu Peninsula, Auckland for $3,858,750 from Waitakere Properties Limited of Aotearoa.
The Applicant is a predominant player in the Auckland housing market with a principal activity in the development of blocks of land in the Auckland region for the construction and sale of residential house and section packages. The Applicant is continually searching for land for residential development to meet the demands of the population. The subject property adjoins an existing subdivision which has been developed by the vendor over the last five years. The Applicant proposes to develop the subject land which comprises 46 vacant residential lots and construct 46 townhouses for resale. The development is likely to commence in November 2002 once the land development is complete. The overall development is expected to be completed over an 18 month timeframe.
Universal’s last purchase, 0.99 hectares at Peninsula Road, Mangere, Auckland, was approved in September 2002. See our commentary for that month for further details. Land for forestry· Three groups of investors from Taiwan have approval to acquire land at State Highway 22, Te Akau Road, near Ngaruawahia, Waikato from the New Zealand Forestry Group Limited, which is owned 76% by Wesley Garratt of Aotearoa and 24% by J Hong of Taiwan. They are all members of the Brooklands Forest Group, which “has entered into an arrangement with New Zealand Forestry Group, to develop approximately 1,200 hectares of land at Ngaruawahia”. They are: · The Yao Family Trust, 14 hectares for $89,600; · The Jian-Yuan Lin and Hsiu-Chuan Lee Partnership, 17 hectares for $108,800; and · The Huang Chi Lin Family Trust, 14.5 hectares, for $89,900. These sales are like many in this and other regions organised by New Zealand Forestry Group, the last such sales being in September 2002, also in Ngaruawahia, with investors in the Brooklands Forest Group. The investors provide the money, while New Zealand Forestry Group manages the development of the forestry operation. · John Gordon Abbott of Japan has approval to acquire 83 hectares at Marorau Road, Wanganui for $236,250 from GA Johnstone of Aotearoa. “The Applicant proposes to acquire the subject property to establish the majority of the property in forestry with the exception of approximately seven hectares of flat land which may be leased to a neighbouring farmer for continued farming purposes and also to provide future access for silviculture and harvesting. The forestry programme will lead to the steeper, scrub covered and erosion prone land being planted in pinus radiata. This proposal represents the third forestry investment by the Applicant in New Zealand.” In January 1998, Abbott, then described as “a U.K. citizen currently resident in Japan”, gained approval to acquire 200 hectares at Omahina RD2, Waverley, Taranaki for $450,000. The land, which adjoins Lake Momahaki, was to be used for forestry, supplemented by livestock farming. Abbott also owns a neighbouring 118 hectare block. Land for wine· Negociants New Zealand Limited, owned by Samuel Smith & Son Pty Limited, of Australia, has approval to acquire 15 hectares at Rapaura Road and State Highway 6, Blenheim, Marlborough for $2,475,000 from GJW Taylor of Aotearoa. “The Applicant is part of a group of companies, the parent of which is an Australian company Samuel Smith & Son Pty. Limited. The Samuel Smith companies are collectively known as Yalumba Winery. Yalumba is Australia’s oldest family owned winery based in the Barossa Valley region of Australia. The Samuel Smith group of companies has largely been involved in the production and marketing of wines produced by the company. The company also markets wines produced by other vineyards both in Australia and outside Australia. The Applicant is the New Zealand arm of the Smith companies. Its business has two distinct but inter-related parts being the production of quality New Zealand wines under the Nautilus/Twin Island brands and the business of a negociant of fine wines. The Applicant proposes to acquire the subject property and intends to plant approximately 12.5 hectares in Sauvignon Blanc, Pinot Noir and Gewürztraminer, and to construct a white wine winery which will compliment the Applicant’s existing Pinot Noir winery on the adjoining land.” Negociants last received approval to buy land in March 2001, when it gained approval to acquire two adjoining blocks of land at Rapaura Road totalling 15 hectares. See our commentary for that month for further details. · Dale Henry Ellis and Rhonda Ellis of the U.S.A. have approval to acquire 23 hectares at State Highway 1, Riverlands, Blenheim, Marlborough for $1,912,500 from DR and JM McCallum of Aotearoa. “The Applicants propose to acquire the subject property, which is currently farmed as part of a larger property under a mixed cropping/pastoral regime by the vendors, to develop a vineyard. They intend to produce wine under their own label primarily for the export to the United States utilising the Applicants’ existing contacts in the United States beverage and wine industry. The property has approximately 13 plantable hectares which will be established in Sauvignon Blanc. Initially, the grapes from the property will be processed at local wineries. In the longer term the Applicants intend to construct their own winery.” · Beston Delegat’s Wine Trust, owned in Australia via 81.72% in public listings, 9.2% by Commonwealth Bank of Australia of Australia, and 9.08% by Roche Group Pty Ltd, has approval to acquire 201 hectares at Redwood Pass Road, Seddon, Marlborough for $9,843,750 from Delegat’s Wine Estate Limited, owned by J and R Delegat of Aotearoa. Beston Delegat’s Wine Trust “is a specialist funding vehicle established to capitalise on the growth in the viticultural industry by providing funding for the infrastructural requirements of the industry. It has an established portfolio in Australia and New Zealand. It acquires vineyards and associated infrastructure from certain wineries and vineyard operators and leases them back for fixed terms. The Applicant is in effect a cost effective funding vehicle for wine companies enabling certain winery and vineyard operators to outsource the high capital components of their operations. The Applicant proposes to acquire the Dashwood Vineyard located in Marlborough from Delegat’s Wine Estate Limited and then lease it back to the vendor. In essence the transaction is a funding transaction which will enable Delegat’s to further develop its viticultural business and in particular the development of the subject property.” The “established portfolio” referred to was acquired in 2001. In April 2001, Beston Delegat’s Wine Trust received OIC approval to acquire the business assets of Delegat’s Wine Estate for $8,620,000 and lease it back to the company. The assets included 406 hectares of land in Hawkes Bay. See our commentary for that month for further details. · Montana Group (NZ) Limited, owned by Allied Domecq PLC of the U.K., has approval to acquire 71 hectares at Flemings Road, Seddon, Marlborough for $2,610,625 from Rayonier New Zealand Ltd, a subsidiary of Rayonier Inc of the U.S.A.. “The Applicant is the largest participant in the New Zealand domestic wine business and future growth opportunities are limited. The Applicant has identified the acquisition of further vineyards or land for development for the growing of grapes as a way of being able to compete more effectively in the national and international wine markets… The subject property has been utilised by the vendor as a commercial seed orchard. Following the significant drought event in the region in 2000, the Applicant has decided to source seeds through an alternative supply and has endeavoured to sell the property since this time.” · Kenneth Vidar and Michael Libster of the U.S.A. have approval to acquire 32 hectares at Maori Point Road, Tarras, Central Otago for $702,000 from NG Trevathan of Aotearoa. “The subject property comprises part of a larger block of land being subdivided by the vendor for viticulture development. The land being subdivided has been utilised for sheep farming and is separated from the vendor’s main farm. The Applicants propose to establish a vineyard on the subject property to be planted in Pinot Noir. As part of the development it is also proposed to develop a winery, with the capacity to produce wine from grapes grown on the subject estate and other grapes as are available in the locality.” · Cote Sauvage Vineyard, owned 50% each by MW Sauvage and D Sauvage, both of the U.S.A., has approval to acquire 31 hectares at Loop Road, Bendigo, Cromwell, Otago for $731,250 from JC and HL Perriam of Aotearoa. “The subject property, although forming part of the greater Bendigo Station, is part of the Bendigo Vineyard development. The Applicant proposes to establish a vineyard, planted predominantly in Pinot Noir, on the approximately 15 plantable hectares. The Applicant, who recently acquired land for a vineyard near Cromwell, has an objective to establish a small boutique vineyard operation producing predominantly Pinot Noir with some Chardonnay and Riesling, using the services of its United States advisers and local viticulturists. The Applicant intends to construct a winery facility and tasting room on their existing property once the vineyard development is established. The Applicants currently import and distribute New Zealand wine from nine vineyards in the United States and intend using this established network to market the wine produced from the subject property.”
In March 2002, Sauvage Family Vineyard, owned 27.1% each by MW Sauvage and AL Sauvage, 21.65% each by WA Sauvage and JJ Sauvage, and 2.5% by NC Rucker, all of the U.S.A., gained approval to acquire 20 hectares at Burn Cottage Road, Cromwell, Otago. The Sauvages proposed to establish a vineyard on the property, which has “approximately 12-14 plantable hectares”. See our commentary for that month for further details. The Perriams are major land owners in the area – see for example our commentary on the September 2001 decisions. · Richard and Patricia Allen of the U.S.A. have approval to acquire 2.0 hectares at Gibbston Valley, Queenstown, Otago for $247,500 from Wentworth Estates Limited of Aotearoa. “The Applicant proposes to acquire the subject property which is part of a subdivision and development of fourteen lots undertaken by Wentworth Estates Limited. The subject property adjoins a 5.6631 hectare property previously acquired by the Applicant. The sale of the individual parcels of land releases equity for the vendor to assist in the further development of Wentworth Station Winery Limited. The proposal is a joint venture between the Applicants and Wentworth Estates Limited, whereby the Applicants are providing the development risk capital and Wentworth Estates Limited is providing the grape growing and winemaking expertise.” In February 2000, Wentworth Estates Ltd received OIC approval to sell two parcels of Gibbston Valley land for subdivision. One was of 6.0 hectares to Vincent and Patricia Allen of the U.S.A., for $335,000. In November 2001, Richard and Patricia Allen of the U.S.A. received approval to acquire 6.0 hectares for $385,312 in Gibbston Back Road, Gibbston Valley from Gibbston Back Road Ltd. See our commentaries for those months for further details. Canadians buy further 880 hectares of Canterbury landForest Creek Station Limited, owned by T R D and M H Harpur of Canada, has approval to acquire 880 hectares at Tui Station, Rangitata Gorge Road, South Canterbury for $720,000 from Harpenden Holdings Limited of Aotearoa.
The Harpurs already own the 2,228 hectare Forest Creek Station, and the present land adjoins that station. The land “currently forms part of a neighbouring property, and is approximately 880 hectares in size. The land that is proposed to be sold will have no legal or physical access and can only be incorporated into a neighbouring property.”
The land to be sold is essentially undeveloped tussock land that the vendor seldom grazes. The vendor does not want to develop the land in question and would rather sell the land to use funds for other purposes. The Applicant states that the land is ideally situated for Douglas Fir forestry. The purchase will add significant scale to Forest Creek Station’s existing operations thereby improving and increasing the economies of scale without adversely affecting the existing farming productivity.
The Harpurs have extensive land holdings in Aotearoa. In April 2002 we reported that Forest Creek Station Limited had received approval to acquire 2,831 hectares at Cainard Road, Fairlight, Southland for $5,400,001, part of which would be converted to forestry. In September 2001, Mari Hill Harpur of Canada and J.J. Hill III of the U.S.A. gained approval to acquire 600 hectares of Glenmore Station, Northcoat Road, Garston, Southland for $506,250. They planned to use it for Douglas Fir and some Ponderosa Pine. The land was “within 10km of Cainard Station” which the two received consent to acquire and convert to forestry in September 2000. In April 2000, the OIC approved T.R.D. and M.H. Harpur of Canada purchasing the 2,228 hectare Garondale Station, Peel Forest, South Canterbury, for $2,474,998. Garondale was used mainly for sheep and cattle farming and the Harpurs intended to develop a 1,400 hectare Douglas Fir forest on the property. They were already partners in a deer breeding business based at the nearby Peel Forest Estate. See our commentaries for those months for further details. Coleridge Downs owner buys 50% share in Annavale Farm, CanterburyCalvin Pardee Erdman of the U.S.A. has approval to acquire up to 50% of Annavale Limited, which owns the 2,688 hectare Annavale Farm, Main West Coast Road, Springfield, Canterbury, for $1,999,999 from Bell Investment Trust of New Zealand.
Erdman is the principal shareholder in Coleridge Downs Limited which owns the Coleridge Downs farm property at Coleridge.
Annavale farm currently runs Corriedale ewes producing prime and store lambs. The Applicant proposes to change breed to running Romney Texel cross ewes targeting heavy weight, early season and prime lamb production. The Romney Texel cross breed is high performance in terms of lambing percentage, lamb growth rates and production of a heavy lean carcass demanded in the market place. The Applicant also intends to farm a high marbling breed of Angus cattle and increase numbers and production through increased calving, and more intensive finishing by wintering only high performance cattle. The operation will be targeting the high value high quality Japanese beef market. Approximately 20 hectares of the flat land on the property are suitable for and will be utilised for vegetable seed production and will provide a profitable diversification and will not have any significant impact on livestock capacity. These will be grown under contract to South Pacific Seeds (NZ) Limited.
The Erdman family received OIC approval to buy the 1,899 hectare Coleridge Downs Farm Ltd near Darfield, Canterbury for $1.8 million in June 1994. Coleridge Downs added a further 21 hectares in 1998, in a land swap with the Electricity Corporation of New Zealand. See our commentaries for those months for further details. US visitors buy land near Masterton for hunting lodgeLee Stuart Guertler and Della Ming Lin of the U.S.A. have approval to acquire 480 hectares at Homewood Road, Masterton, Wairarapa for $1,181,250 from AL and CJ Prattley of Aotearoa.
The Applicants who have a strong interest in hunting, have been regular visitors to New Zealand for hunting expeditions. They propose to acquire the subject property to establish a hunting lodge/hunting expedition business. They propose to establish a joint venture to operate the business with Adrian and Wendy Moody, who operate as professional hunting guides under the name Mountain Hunters New Zealand and who also undertake a fur processing and retailing business known as Heritage Furs New Zealand. The Applicants are to provide the capital, business expertise and overseas contacts while the Moody’s will undertake the management and physical operation.
The subject property is currently utilised as a sheep and cattle unit and contains 192 hectares of steep country that has no practical farming use and which is clad in bush and scrub. The Applicants advise that part of this property is ideal for the release and establishment of trophy stags, whilst the balance of the farm would lend itself to game bird hunting within an established deer farm. Other rural land sales· Michael William Quentin Yeoman and Claire Louise Yeoman of the U.K. have approval to acquire 5.2 hectares at 377 Tuhimata Road, RD 2, Drury, South Auckland for $773,000 from GB and BJ Needham of Aotearoa. “The Applicants have applied for New Zealand permanent residency under the General Skills category and propose to acquire a lifestyle property situated at Drury, South Auckland. Mr Yeoman has been offered and accepted a permanent position as General Manager – Transport for Alstom New Zealand. The Applicants intend to reside on the property which contains a dwelling.”
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