Foreign investment in Aotearoa/New Zealand

Overseas Investment Office – September 2013 Decisions

Dutch Buy A Half Share Of 23,471 Acres

The most significant land approval this month was Duxton Asset Management Pte Ltd, for itself and as investment manager for Duxton Agricultural Land Fund and Stichting Pensioenfonds ABP Netherlands (93.7%), Cayman Islands (5.3%), and Singapore (1%) receiving approval for the acquisition of rights or interests in 50% of the shares of New Zealand Pastures Limited which will indirectly own or control a freehold interest in approximately 23,471 hectares of land being seven sheep and beef farms located in the South Island (known as Three Rivers, Grantham Springs, Hitchin Hills, Quailburn, Hills Creek, The Styx and Huntleigh). The vendor was former shareholders of Greenfield Rural Opportunities Limited and Lakeview Rural Holdings Limited New Zealand Public, (96.5%) and United Kingdom Public (3.5%); consideration was confidential.

The OIO states: “Duxton Asset Management Pte Ltd is an investment manager which represents itself and two overseas investment funds for the purposes of this transaction. The new overseas investment capital will allow the current farming model to continue to develop and lift productivity on the farms”. Given the amount of land involved you’d think Federated Farmers would have something to say. Well, they did, and were cautiously optimistic as Annette Scott reported in Agrihq.co.nz:

“The sale of a large chunk of South Island hill country to overseas investors may not be such a bad thing, Canterbury farmer and Federated Farmers’ National Meat and Fibre Chairwoman Jeanette Maxwell says. The Overseas Investment Office (OIO) has approved the application for overseas interests to buy a 50% shareholding in New Zealand Pastures, a NZ-owned company that operates seven South Island sheep and beef farms, mostly in Canterbury. Dutch pension fund Stichting Pensioenfonds ABP, with a 46.85% shareholding, Duxton Agricultural Land Fund of the Cayman Islands, with 2.65%, and Singapore-based Duxton Asset Management, with 0.50%, make up the 50% share purchase from the NZ vendors, former shareholders of Greenfield Rural Opportunities and Lakeview Rural Holdings.

“The new company NZ Pastures was registered in December (2012). Its three directors, former Fonterra director Stuart Nattrass, of Christchurch, and Ian Frame and Liberato Petagna, of Wellington, were appointed (in August 2013). Petagna is also a director of Terrace Nominees, one of the 13 shareholders holding the remaining 50% of NZ Pastures. Accident Compensation Corporation, with a 15.56% shareholding, is the largest NZ shareholder in NZ Pastures. The seven farms – Three Rivers, Grantham Springs, Hitchin Hills, Quailburn, Hills Creek, The Styx, and Huntleigh – cover almost 24,000ha.

“Auckland-based lawyer Craig Nelson, of Simpson Grierson, said Duxton Capital was the investment manager representing itself and the two overseas investment funds for the sale. The new overseas investment capital would allow the current farming model to continue to develop and lift productivity on the farms, Nelson said. NZ Pastures’ Christchurch-based Managing Director Warren Taylor confirmed the farming assets of the company would continue to be NZ-owned and the management of the seven farms would remain with the current farming tenants. ‘We are extremely pleased to have been able to attract high-calibre partner investors into NZ agriculture’, Taylor said. The price for the 50% ownership has not been revealed.

“This is the second big overseas investment in South Island farmland approved in recent months. In September (2013), one of NZ’s biggest farming operations, Canterbury’s Mt Pember Station in Lees Valley, was sold to a North American investment group. Mt Pember is an amalgamation of seven properties, totalling more than 27,000ha. At the end of the day it was a legislated process and not necessarily all bad news for overseas investment in NZ farmland, Maxwell, a Mid Canterbury sheep and beef farmer, said. She was concerned about the ability of NZ farmers to buy land in the future. ‘Under the new lending criteria, that not only applies to urban home buyers, we (farmers) just don’t know how hard it will be for us to buy businesses, as in farm properties’, she said. ‘We expect as we go forward it will be quite difficult. It’s a huge investment of capital, with lower cashflow in line with the value of the property and how hard that will be (to mortgage) we don’t know yet’.

“Maxwell said overseas investors allowed good managers to farm without the burden of debt. ‘If these overseas investors are employing Kiwis and good managers with clear plans to improve and grow the business then it is better in the long run. I am not sure about the structure of the current business (NZ Pastures) but hopefully it will give Kiwis the opportunity to be employed’. She conceded overseas investment in NZ farmland could be a bit sad. ‘Some make it flourish and that is great but some sit on it and that is wasted'”.

The Trust Company Is “Perpetually” Australian

Perpetual Limited Australia (100%) received approval for the acquisition of rights or interests in 100% of the issued share capital of The Trust Company Limited which indirectly owns or controls various interests in sensitive land located at various locations around New Zealand. The vendors were existing shareholders of The Trust Company Limited Australian Public and various overseas persons. Consideration was approximately $A233 million for the world-wide business of The Trust Company Limited. The value of the New Zealand business is less than $NZ100 million. The OIO states “The Applicant is a diversified financial services group listed on the Australian Stock Exchange (ASX) which is proposing to acquire 100% of the issued share capital of The Trust Company Limited (also listed on the ASX). The acquisition of The Trust Company by the Applicant will accelerate the Applicant’s growth strategy, broaden its regional footprint and provide new capabilities”.

Tag Oil Sells Opunake Hydro To Fellow Canadians

Coronado Resources Ltd Canada Public (80%), New Zealand Public (9.8%), United States Public (7.5%) and Various (2.7%) received approval for an overseas investment in sensitive land, being:

(a) the Applicant’s acquisition of rights or interests in up to 100% of the ordinary shares of Opunake Hydro Limited which owns or controls a leasehold interest in approximately five hectares of land at Domett Street, Opunake, South Taranaki; and

(b) TAG Oil Limited’s acquisition of rights or interests in the ordinary shares of Coronado Resources Ltd. to be issued as part of the consideration for the transaction referred to in paragraph (a) above.

The consideration was confidential; the vendors were existing shareholders of Opunake Hydro Limited Canada Public (85.7%), New Zealand Public (10%), United States Public (4%) and various (0.3%). The OIO states: “The Applicant is a small Canadian mining company with operations in Montana, USA. It has decided to diversify into the power generation and retail business segment and to invest internationally. To this end it has sought and been granted consent to acquire Opunake Hydro Limited (OHL), a small electricity generator and supplier based in Taranaki. Coronado wishes to expand OHL’s business by funding the acquisition and installation of additional gas fired generators capable of generating 4 MW of power”. The vendor was in fact Tag Oil Ltd which purchased Opunake Hydro just ten months earlier (see our December 2012 commentary). As a result of this sale, Tag Oil will own just over 49% of Coronada Resources.

Hong Kong Interests Buy Marlborough Vineyard

T QWIL Investments (NZ) Pty Limited Gold Rainbow International Limited, Hong Kong (45.3%), Trueway International Limited, Hong Kong (22.1%), Triluck Assets Limited, Hong Kong (7.4%), Hong Kong Public (25.2%) and various overseas persons (0.006%) and Treasury Wine Estates (Matua) Limited Australian Public (29.9%), United Kingdom Public (22.1%) and various overseas persons (48%) received approval for an overseas investment in sensitive land, being:

QWIL Investments (NZ) Pty Limited’s acquisition of a freehold interest in approximately 158 hectares of land at 1125 Northbank Road, Marlborough (Northbank Vineyard); and
Treasury Wine Estates (Matua) Limited’s acquisition of a leasehold interest in approximately 158 hectares of land at 1125 Northbank Road, Marlborough (Northbank Vineyard). The vendor was Winestock NZ Limited Australian Public (100%). Consideration was $16,200,000 (freehold) and $26,606,880 (leasehold rental). The OIO states: “The Applicants intend to continue to operate and develop the vineyard business located on the land”.

And Aussies Grab Another Marlborough Vineyard

In a second Marlborough vineyard sale this month Craggy Range Vineyards Limited Terrence Elmore Peabody, Australia (99%) and Stephen Mark Smith, New Zealand (1%) received approval for the acquisition of a freehold interest in approximately 273.5 hectares of land at Awatere Valley Road, Marlborough. The vendor was Black Birch Holdings Limited Lisa Marie Cooper, New Zealand (100%): consideration was $17,000,000. The OIO states: “The investment will allow the Applicant to expand and develop its export wine markets. It will also provide the Applicant with security of grape supply for its existing winery”. See our commentaries for October 2000, June 2004, August 2006, July 2009, July 2010, June 2011and September 2012 for details of land purchases here by Mr Peabody and Craggy Range Vineyards.

Other September Decisions

And finally for September, NZ Rural Holdings Limited Benedict Nga-Yan Sin, Australia (100%) received approval for the acquisition of a freehold interest in approximately 6.5 hectares of land at 277 Grasslands Drive, Cambridge. The vendor was Bell’s Feed & Grain Limited Michele Louise Bell, New Zealand (50%) and John William Bell, New Zealand (50%): consideration was $950,000. The OIO states: “The Applicant intends to further develop the bloodstock business operated on the property. This is likely to result in new job opportunities, increased exports of race horses from New Zealand and the introduction of additional capital for development purposes”.

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