Foreign investment in Aotearoa/New Zealand

Overseas Investment Office – October 2015 Decisions

Americans To Buy 2,626 Hectare Forest From Mighty River Power

Another busy month at the OIO, with a number of significant approvals. The most significant, in terms of land sales, was Blakely Pacific Limited as trustee of the South Blakely Trust Eddy Family, United States of America (100%), receiving approval for the acquisition of a freehold interest in approximately 2,625.7 hectares of land at Pinnacles Forest & Sun Valley Forest, Kaituna, Rotorua (the “Land”). Consideration was “withheld under section 9(2)(b)(ii) of the Official Information Act”.; the vendor was Mighty River Power Limited,The Crown, New Zealand (51.8%), New Zealand Public (36.7%), United States Public (4%), United Kingdom Public (3.2%), Australian Public (2.7%), Hong Kong Public (0.8%), European Public (0.7%) and various overseas persons (0.1%).

The OIO states: “The Applicant is acquiring the Land for inclusion in its North Island forestry portfolio and as part of its longer-term goal to increase its overall annual harvest in New Zealand. The Land is currently planted in pinus radiata and is in close proximity to some of Blakely’s existing commercial forests. The Applicant will operate the forests in conjunction with its adjoining and nearby forests and move a proportion of the forests to a more intensive pruning regime. It also proposes environmental initiatives including a significant commitment to protect and enhance the kokako habitat located on and around the Land”. Blakely has been a regular OIO applicant for land for forestry purchases for the past 16 years. See our May 1995 commentary for details of Blakely’s original purchase of the 2,009 hectare Pentland Hills Station Ltd at Waimate and a further 78 hectares added in August 2010. Other purchases include the 2000 hectare Saddle Peak Station in March 2007 and 3,689 hectares in Waimate in April 2003.

Japanese Consolidate Their 12,500 Hectare Forestry And Mill Ownership

Wood One International Limited,Wood One Company Limited, Japan (100%), has received approval for the acquisition of rights or interests in up to 100% of the shares of Juken New Zealand Limited which owns or controls:

a freehold interest in approximately 12,488.24 hectares of land; and
a leasehold interest in approximately 1,673.11 hectares of land.

Approval was also received for an overseas investment in significant business assets, being the Applicant’s acquisition of property in up to 100% of the shares in Juken New Zealand Limited which has assets valued in excess of $100 million. Consideration was $17,200,000; the vendor was Yusho Nakamoto,Japan (100%) The OIO states: “Wood One International Limited (“Applicant”) seeks to increase its shareholding in Juken New Zealand Limited (“JNL”). The Applicant currently holds approximately 85% of the ordinary shares of JNL, which has extensive interests in forests in New Zealand, as well as four timber mills that manufacture laminated veneer lumber, sawn lumber and panels for export to Japan, Australia and other south-east Asian destinations. To commemorate its increased interest the Applicant plans to sponsor and be involved in two projects. One involves the propagation and planting of the critically endangered white ngutukākā in conjunction with Scion, and the other project involves the restoration of the Waingake bush area”.

Tomatoes Ripe For German-Owned Turners And Growers Picking

In two separate decisions, T&G Global Limited,Federal Republic of Germany, Germany (73.1%), New Zealand Public (16.5%), New Zealand Public and Various Entities, New Zealand (10.3%) and various overseas persons (0.1%), firstly received approval for the acquisition of rights or interests in up to 100% of the shares of Rianto Limited, which owns or controls a freehold interest in 18.8 hectares of land at 133 Lynd Road, Ohaupo, Waipa. The vendor was Cleland Hancox Trustees Limited, Franciscus van Rijen and Toni van Rijen as trustees, Franciscus van Rijen and Toni van Rijen,New Zealand (100%); consideration was $8,500,000.

In the second decision, T&G Global Limited received approval for the acquisition of rights or interests in up to 100% of the shares of Great Lake Tomatoes Limited which owns or controls a freehold interest in 74.4 hectares of land at 3057 Broadlands Rd Reporoa, Bay of Plenty. The vendor in this case was Great Lake Tomatoes Limited,Produce Trading and Management Services Limited, New Zealand (55%) and Nezarco Limited, Argentina (45%): consideration was $17,300,000.

In the case of the first decision the OIO states: “T&G Global Limited’s subsidiary, Status Produce Limited, intends to acquire Rianto Limited, a tomato growing business. It plans to replant the glasshouse in one or more of the specialty variety tomatoes it has rights to. T&G Global Limited also intends to coordinate the tomato growing and picking with those of its other operations to increase exports by sea-freight”. In respect of the second decision, the OIO states: “T&G Global Limited’s subsidiary, Status Produce Limited, intends to acquire Great Lake Tomatoes Limited, a tomato growing business. It plans to significantly expand the current glasshouse. T&G Global Limited also intends to co-ordinate the tomato growing and picking with those of its other operations to increase exports by sea-freight”. See our March 2012 commentary for details of the Germans’ original purchase of Turners and Growers and our November 2014 commentary for details of T&G Global’s first significant purchase here – a large Hawkes Bay apple orchard.

Chinese Public To Get A Stake In Waste Management

Beijing Capital Company Limited,Chinese Government, China, People’s Republic of (54.3%) and China Public (45.7%), has received approval for the acquisition of rights or interests in 65% of the issued share capital of BCG NZ Investment Holding Limited, which owns or controls:

a freehold interest in approximately 182.7 hectares of land at Redvale Landfill, Landfill Access Road, Dairy Flat; and
a leasehold interest in approximately 2.3 hectares of land at Redvale Landfill, Landfill Access Road, Dairy Flat; and
a freehold interest in approximately 79.2 hectares of land at Fairfield Landfill, 125 & 127 Old Brighton Road, Dunedin; and
a freehold interest in approximately 1.3 hectares of land at 25 Inlet Road, Papakura; and
a leasehold interest in approximately 1.5 hectares of land at 8 Daphne St, Te Awamutu; and
a freehold interest in approximately 1.2 hectares of land at 57-59 Port Road, Lower Hutt; and
a freehold interest in approximately 123.2 hectares of land at Bonny Glen Landfill, Bruce Road, Turakina; and
a freehold interest in approximately 1461 hectares of land at Kate Valley, Mt Cass Road, Waipara, North Canterbury; and
a leasehold interest in approximately 12. hectares of land at 600 Island Road, Puketutu Island, Mangere, Auckland; and
another interest in approximately 55.9 hectares of land at Horseshoe Bush Rd; and
a leasehold interest in approximately 0.6 hectares of land at 108 & 110 Ostend Road, Waiheke Island, Auckland; and
a leasehold interest in approximately 0.1 hectares of land at 53 Port Road, Lower Hutt; and
a freehold interest in approximately 0.6 hectares of land at 27 Seaview Road, Wellington.

Approval was also received for an overseas investment in significant business assets, being Beijing Capital (Hong Kong) Limited’s acquisition of rights or interests in 65% of the issued share capital of BCG NZ Investment Holding Limited, the consideration of which exceeds $100m. The vendor was BCG ChinaStar International Investment Limited,Chinese Government, China, People’s Republic of (100%); the asset value was $397,077,784. The OIO states: “The Investment is part of a restructuring by Applicant’s group of companies of its ownership interest in Waste Management NZ Limited. The Applicant and the vendor are all associated with, and directly or indirectly wholly or partially owned by, Beijing Capital Group Company Limited”. See our June 2014 commentary for details of the original Chinese purchase of Transpacific Industries, the holding company for Waste Management.

Tiongs Buy 1,264 Hectare Kumeroa Station

Ernslaw One Limited,Tiong Family, Malaysia (100%), received approval for the acquisition of a freehold interest in approximately 1,264 hectares of land at 583 Otawhao Rd, Woodville (Kumeroa Station). The vendor was Kumeroa Station Trust New Zealand (100%); consideration was $5,400,000. The OIO states: “The Applicant intends to convert most of the Land (currently used for sheep/beef farming) into pine forest as part of its forestry holdings. Around 190ha of the Land is intended to be retained for pastoral farming”.

Commentary on the deal was reported in Stuff.co.nz (14/12/15): “Malaysian-owned forestry company Ernslaw One has been granted consent by the Overseas Investment Office to buy 1,264-hectare Kumeroa Station near Woodville for $5.4 million. At present the station is a sheep and beef farm. Ernslaw One intends to convert almost all of it to plantation forestry and sell off the 180-ha block containing the homestead. Ernslaw Operations Manager, Steve Couper, said the purchase fitted in with its other forestry holdings in the Wairarapa. “It was quite expensive but it is near the main highway to Napier,” Couper said. The forest would be developed in two “hits” of 500 ha a year. First plantings of radiata pine will start in July 2016.

“The property is generally steep with good rainfall. No fertiliser would be required because it had sufficient. Couper said some former farms were too fertile for forestry. Cost per hectare of the planting is $1,000. Because there is no return for 25 years, forestry owners depend on carbon credits to offset their investment. Couper predicted returns from the emissions trading scheme would improve. Ernslaw One would continue to look at buying land which might prove suitable for forestry. The fourth largest forest owner in the country, Ernslaw One’s owners are a family headed by Tan Sri Datuk Sir Tiong Hiew King. The company has been investing in New Zealand since 1990. It has a broad geographic spread of forests, from the Coromandel, East Coast, Ohakune, Manawatu, Wairarapa, Marlborough, and Otago-Southland”. As we reported back in May, the Tiongs have been regular buyers of forestry land here in Aotearoa.

Office Max Gets New American Owner

Staples Inc. United States Public (81.1%), The Vanguard Group, Inc., United States of America (7.6%), BlackRock, Inc, United States of America (5.9%), and FMR LLC, United States of America (5.3%), received approval for the acquisition of rights or interests in 100% of the shares of Office Depot, Inc., which owns or controls:

a leasehold interest in approximately 2.8 hectares of land at 196-208 Middleton Road, Johnsonville, Wellington; and
a leasehold interest in approximately 2.4 hectares of land at 460 Rosebank Road, Avondale, Auckland.

Approval was also received for an overseas investment in significant business assets, being the Applicant’s, or Staples AMS Inc’s, acquisition of rights or interests in 100% of the shares of Office Depot Inc., where the value of the New Zealand assets of Office Depot, Inc. and its 25% or more subsidiaries is greater than $100m. The vendors were Existing shareholders of Office Depot Inc. United States Public (63.8%), Starboard Value LP (and related entities), United States of America (9.9%), AllianceBernstein LP, United States of America (8.6%), BlackRock Institutional Trust Company NA, United States of America (7%), The Vanguard Group, Inc., United States of America (5.8%) and various overseas persons (4.9%); the asset value was $232,424,000.

The OIO states: “The Investment is part of an international transaction, involving Staples Inc. acquiring Office Depot, Inc. for approximately $US6.3 billion. Staples Inc. considers that the complementary nature of the two organisations gives an opportunity to realise significant synergies and savings while investing in key growth priorities”. While this deal has been approved here by the OIO and by European Trade regulators, it has yet to be approved in the US where the Federal Trade Commission believes less competition (and ultimately higher prices to consumers) will result. See our November 2013 commentary for details of Office Depot’s purchase of Office Max here in New Zealand.

GE Selling Its NZ Consumer Finance Business

Latitude Financial Services Limited, United States Public (39%), German Public (30%), various overseas persons (12%), Singapore Public (5.6%), Cayman Islands Public (4.5%), Saudi Arabian Public (4.4%), Canadian Public (2.5%) and Swiss Public (1.9%), received approval for an overseas investment in significant business assets, being:

the Applicant’s acquisition of property in New Zealand used in carrying on business in New Zealand for consideration exceeding $100m, that property being all of the consumer finance assets and business of GE Finance and Insurance; and
the acquisition by The New Zealand Guardian Trust Company Limited (as trustee of the New Zealand Personal Loans Trust and as trustee of the New Zealand Sales Finance and Credit Cards Trust) of property in New Zealand used in carrying on business in New Zealand for consideration exceeding $100m, that property being consumer loans (and any associated security) of GE Finance and Insurance and the Applicant.

The vendor was GE Finance and Insurance, General Electric Company, United States of America (100%): consideration was withheld under s(9)(2)(a) and s(9)(2)(b)(ii) of the Official Information Act. The OIO states: “The Applicant seeks to acquire all of the Vendor’s New Zealand consumer finance assets and business. The Applicant considers this business has a strong, stable financial position and a leading position as a non-bank provider of funding to New Zealand consumers”. As we reported last month, this sale is part of GE’s world wide sell-off of its finance subsidiaries.

Susan Edmunds at Stuff.co.nz reports on the local impact (23/11/15): “Consumers who have loan and hire purchase agreements with GE Money will soon find they are dealing with a different company. Varde Partners, Deutsche Bank and KKR have bought GE Capital’s Australian and New Zealand consumer finance business, which will be renamed Latitude Financial Services. GE Money has about 400,000 customers in New Zealand, using personal loans, credit cards, insurance and interest-free hire purchase products. It operates the Gem Visa and GE CreditLine. About 2,000 retailers nationwide accept the card. Some of the highest-profile includes Harvey Norman, Freedom Furniture and Noel Leeming, which regularly offer interest-free deals for customers, using GE Finance. One of its major competitors is Fisher and Paykel Finance’s Q Card.

“Latitude’s Chief Executive, Sean Morrissey, said the lender has more than 2.5 million customers and long-standing partnerships with major retailers in Australia and New Zealand. There would be no immediate change for customers, Morrissey said. The acquisition is one of the largest private equity transactions in Australia and New Zealand. Jessica Wilson, of Consumer NZ, said there were some protections that would apply to GE customers if they were worried about the rules changing as they moved to Latitude.

“‘If a contract gives the lender the right to vary key terms – such as the interest rate – the borrower must be notified of the change. The lender also has to comply with the Act’s responsible lending principles when making variations. If a change is material, a responsible lender would be expected to assess its impact on the consumer, particularly whether it would cause hardship’. Lyn McMorran, of the Financial Services Federation, said Latitude would remain a member of her organisation. ‘You can take from that they take their responsible lending obligations to their customers seriously, or they wouldn’t have remained a member’.

“She said New Zealand’s personal finance market was probably an appealing one to firms in other countries now that the Credit Contracts and Consumer Finance Act and Responsible Lending Code are in place. Now compliance hurdles had been jumped, she said lenders were well positioned to get on with their core business. ‘The finance company market is in a good position to concentrate on their businesses and start looking for ways to innovate for their customers and easier ways to access credit’. There was growing demand for online and mobile access to credit products, she said. ‘Now they are not spending millions of dollars on compliance they can spend millions of dollars on something else, like more and better products for their customers'”.

Waihi Mine Gets New Owner

OceanaGold Holdings (Waihi) Limited, United States Public (49%), Canada Public (19%), United Kingdom Public (9%), Australian Public (9%), European Public (8%), Federal Republic of Germany, Germany (4%) and various (2%), received approval to acquire rights or interests in up to 100% of the shares of Newmont Waihi Gold Limited (the “Investment”). The vendor was Newmont Mining Corporation, United States of America (100%); consideration US$101,000,000.

The OIO states: “The Investment will see the Applicant become the owner of certain North Island mining assets including the Martha open pit mine and the Correnso underground mine (“Correnso”) at Waihi and 493.9 hectares of sensitive land used for mining and ancillary mining activities. The Applicant plans, among other things, to implement a range of improvements to the underground mining operations at Correnso and increase exploration expenditure”.

Will Oceana be any better than Newmont Mining, who has had a chequered history at its Waihi sites? Newmont had to buy numerous properties around the town because of subsidence caused by its mining operations or to act as a buffer as stated in the above approval. See our monthly commentaries during 2002 to 2005 and July 2010. Simon Hartley at the Otago Daily Times (1/5/15) reports on the background and context for this deal: “East Otago-based Oceana Gold has bought Newmont Mining Corp’s North Island Waihi operations for $US101 million ($NZ132.3 million), offering surety Oceana’s New Zealand operations will continue for several years. The combined operations will this year employ about 1,000 staff in New Zealand and overall gold production next calendar year will be potentially well beyond 400,000 ounces, including Philippine contributions.

“In the face of rising costs and gold price volatility, Oceana has shed almost 300 staff and contracting jobs from Macraes in Otago and Reefton on the West Coast, as part of a $US100 million efficiency drive during the past two years. Oceana is already the country’s largest gold miner and has expectations of producing up to 335,000 ounces of gold this year, from the South Island and the Philippines. The North Island acquisition is expected to contribute a further 100,000 oz annually.

“Oceana Chief Executive, Mick Wilkes, said Waihi represented a unique opportunity to acquire a high quality asset which had demonstrated an ability to repeatedly extend its mine life during the past 27 years ”in what is still a very prospective, high-quality goldfield. We’ve long believed that Waihi represents a strong strategic fit within Oceana Gold. We’re excited about the prospect of acquiring it and welcoming its experienced workforce to our team,’ he said.

“In an interview, Mr Wilkes said there would be several ”synergies” from the acquisition, including underground mine management, expertise and experience, equipment and procurement from suppliers. The intended purchase is subject to gaining regulatory approvals and will be paid for from a mix of cash reserves and drawing down of existing debt facilities. The acquisition is to contribute to Oceana’s balance sheet from July 1. The Frasers underground mine in East Otago recently got a mine life reprieve, being extended out to 2016 and the open pit operations might also yet be extended beyond 2017, but a cloud still hangs over Reefton operations. When asked, Mr Wilkes said the Waihi acquisition would not offset the planned mothballing of the Reefton open pit operations, at the end of 2015. Each mine in Oceana’s expanding portfolio had to justify its production costs, Mr Wilkes noting he ”didn’t expect any significant long-term recovery’, in the price of gold, which has undermined Reefton’s viability for the past two years.

“All operations at Waihi were expected to continue as ‘business as usual’. Its gold would continue to be smelted into rough ‘dore’ (unrefined gold-silver-alloy) bars, for export and minting, Mr Wilkes said. A review of operations would take place after June. Expectations were the workforce would be unchanged and capital expenditure, such as that on developing the underground Correnso mine, would be financially backed by Oceana. Exploration spending above and below ground would continue at Waihi, at about $5 million per year, which would include gold veins near the old, still closed, Martha pit.

“Mr Wilkes had set a ”cut off” selling price of about $US1,250 per oz for New Zealand operations in March, and said yesterday that rule of thumb was unchanged. However, he believed Waihi’s overall cost of production could reduce overall New Zealand operation costs in the future. Oceana’s quarterly result released yesterday revealed strong actual production for the quarter, of 92,712 ounces of gold produced, compared with 91,146 a year ago. The return from gold sales was down from $US170.3 million a year ago to $US129.3 million.

“After-tax profit declined from $US58.9 million to $US24.4 million. Commodity prices for both gold and copper were down for the quarter, but cash costs to produce an ounce were kept low, despite climbing from $US369 last year to $US402. Debt was reduced by $US13.4 million and $US8.4 million went to cash in hand, which stood at $US59.6 million”. See our May 2006, April 2009, April 2011 and March 2013 commentaries for details of other OceanaGold land purchases particularly in Central Otago around the Macraes site.

New Owner For Transaction Services Group

Transaction Services Group Limited, Calera Capital Advisors LP, United States of America (47.25%), Bolton Equities Limited, New Zealand (47.25%), New Zealand (4.7%), United Kingdom (0.5%) and Australia (0.3%), received approval for the acquisition of rights or interests in 100% of the shares of Transaction Services Group Limited, the consideration of which exceeds $100m. The vendors were: Existing Shareholders of Transaction Services Group Limited, Direct Capital Investments Limited, New Zealand (48%), Bolton Equities Limited, New Zealand (42.4%) and New Zealand (9.6%): consideration was withheld under s(9)(2)(b)(ii) of the Official Information Act.

The OIO states: “The Applicant will acquire its interest in Transaction Services Group Limited (New Zealand) through its 100% subsidiary, TSG Holdings (NZ) Limited. Transaction Services Group Limited (New Zealand) manages payment processing functions for clients in industries including health and fitness facilities, sports clubs, property management companies, maintenance providers, home service providers and insurance companies. The Investment is an opportunity for Calera Capital Advisors, LP to invest in Transaction Services Group Limited (New Zealand) through its acquisition of Direct Capital Investments Limited’s interest.

“The Applicant is an investment vehicle that has been incorporated for the purpose of the Investment to hold the shareholders’ interests in Transaction Services Group Limited (New Zealand)”. TSG is an international direct debit billing service business comprising Debitsuccess in New Zealand and the United States, Debitsuccess and PaySmart in Australia, DFC and Harlands Group in the United Kingdom, and Harlands Group in the European Union. With a New Zealand-based head office, the company specialises in the delivery of recurring payment solutions for a wide range of industries.

Australians Sell Southland Forests To Australians

QIC Strategy Timber No.1 Limited,QIC Limited, Australia (100%), received approval for the acquisition of:

a freehold interest in approximately 989 hectares of land at Braid & Fox Roads, Wyndham (Hillfort Forest); and
a freehold interest in approximately 674.6 hectares of land at 625 Cumming Road, near Lumsden, Southland (Wether Hills Forest).

The vendor was Craigpine Timber Limited,Graeme Lewis Sims Black, Australia (32.3%), Nerissa Margaret Guest, United Kingdom (23.7%), Quentin John Sims Black, Australia (19%), James Malcolm Ott and Michael John Murray Sidey as trustees of the NMG Black 1980 Settlement Trust, Australia (18.4%) and Empiric Holdings Pty Ltd as trustee of the GLS Black Family Trust, Australia (6.6%); consideration was withheld under s(9)(2)(b)(ii) of the Official Information Act. The OIO simply states: “The Applicant is acquiring an established forest of pinus radiata as a timberland investment”. QIC is the Queensland Investment Corporation, a $100 billion Australian superannuation manager. See our February 2015 commentary for details of other forestry purchases here by QIC.

Australians Plan To Capitalise On Growing Foreign Student Numbers

Archer Capital Pty Limited on behalf of Archer Capital Fund 5,Australia (32.8%), United States of America (16.9%), Canada (13.6%), New Zealand (13.5%) and various overseas persons (23.2%), received approval for an overseas investment in significant business assets, being:

Minerva Finance Holdings Limited’s acquisition of rights or interests in up to 100% of the issued share capital of Aspire2 Group Limited;
Minerva Holdings Limited’s acquisition of rights or interests in 100% of the issued share capital of Minerva Finance Holdings Limited; and
Archer’s acquisition of rights or interests in up to 100% of the issued share capital of Minerva Holdings Limited, which will result in Archer having rights or interests in the issued share capital of Aspire2 Group Limited through its interest in up to 100% of the issued share capital of Minerva Holdings Limited which holds rights or interests in 100% of the issued share capital of Minerva Finance Holdings Limited.

Where “Archer” refers to Archer Capital Pty Limited acting on behalf of and as manager or advisor of:

Archer Capital 5A Pty Ltd as trustee of Archer Capital Trust 5A;
Archer Capital 5B Pty Ltd as trustee of Archer Capital Trust 5B;
Archer Capital 5C Pty Ltd as trustee of Archer Capital Trust 5C;
(holding their respective shareholdings through a custodian – Archer Capital Nominees Limited); and
Archer Capital GP5 Limited as general partner of Archer Capital GP5, LP as general partner of Archer Capital Offshore 5 LP.

The vendors were existing shareholders of Aspire2 Group Limited Australia (100%): consideration was $200 million. The OIO states: “Archer intends to acquire (through various subsidiary companies) Aspire2 Group Limited. Contemporaneously with Archer’s acquisition of Aspire2 Group Limited, Archer will fund or procure funding for Aspire2 Group Limited to complete its acquisition of various private training establishment groups”.

Consolidating Six Under Corporate Umbrella

That second Decision referred to is Aspire2 Group Limited,Gregory James Kern, Australia (50%) and Gabriel Anna Giufre, Australia (50%), receiving approval for the acquisition of rights or interests in 100% of the issued share capital of:

Queens Academic Group Limited;
Withheld under s(9)(2)(b)(ii) of the Official Information Act
NZ Tertiary Education Group Limited;
National Tertiary Education Consortium Limited;
Safety-N Action Limited; and
Personalised Education Limited, or any combination thereof, the consideration of which collectively exceeds $100m.

The vendors were:

Lihui Wang Chen,New Zealand (100%).
Withheld under s(9)(2)(b)(ii) of the Official Information Act
CLM Trustees Limited, Mark James Scapens and Sharon Kathleen Scapens as trustees of the Scapens Family Trust No. 2,New Zealand (100%)
Ansari Ma and Lion Holdings (NZ) Limited,Ansari Ma, New Zealand (50%), Ngee Hwai Phua, New Zealand (25.5%) and Anne Therese Feeney, New Zealand (24.5%)
Go Safe Limited,Rhonda Denise McKenzie, New Zealand (50%) and Rowan Bruce McKenzie, New Zealand (50%)
Solomon Family Trust and Franklin and Judith Solomon,Jenny Marie Solomon, Franklin Solomon and Judith Anne Solomon as trustees of the Solomon Family Trust, New Zealand (98%), Judith Anne Solomon, New Zealand (1%) and Franklin Solomon, New Zealand (1.0%).

Consideration was $144,849,012. The OIO states: “The Applicant intends to purchase six private training establishment groups (or a combination thereof) and consolidate them under a corporate umbrella. The Applicant considers that the managing these private training establishment groups together will allow the business to grow and allow for improved quality and consistency between the private training establishment groups”.

Paul MacBeth at Scoop.co.nz reports on the new owners’ plans (23/11/15): “Aspire2 Group, the newly formed training organisation backed by Australian private equity firm Archer Capital, sees more acquisition opportunities in an evolving labour market and as the Government seeks to increase foreign student numbers. The Auckland-based company has acquired private education businesses Cornerstone, Ntec, Queens Academic Group, Safety’n Action and Solomon Group to build the country’s biggest provider of vocational courses to foreign students, with funding coming from Archer Capital and ASB Bank, Aspire2 said in a statement.

“The group currently has about 6,000 students, serves 7,000 clients through its Ministry of Social Development-funded youth services, and provides about 3,000 trainer days for business-to-business customers. Chief Executive Sussan Turner, a former MediaWorks boss, told BusinessDesk Aspire2 will look at expanding into new countries through its international division, made up of Ntec and Queens Academic Group, and will also investigate adding other private tertiary education groups that complement its existing businesses.

“‘The trade space is certainly an area where we’ve got some current capability with our welding school and dive, etc. Those sectors might well be things in the future we say: ‘if we were to build out in that space what would it look like?'” Turner said. ‘If you look at New Zealand’s construction, whether it be what’s happening in Christchurch or look at Auckland and what is coming down the line in terms of skilled workers, we see we’ve got to be ready to help provide some of those skills to industry in advance of there being need’.

“The merger comes as the tertiary sector gets ready for a potential shake-up, with the Government today tasking the Productivity Commission to look at how new trends in technology, globalisation, population, tuition fees and demand for skills may drive changes in the industry’s models. Aspire2 will retain the founders of the acquired businesses for the company’s advisory board and has hired former MediaWorks finance boss Peter Crossan as its Chief Financial Officer.

“Turner said Aspire2 will look at the skill-sets needed by countries where New Zealand is a leader and has an ongoing need, and ensuring the courses and training it offers are what employers want. ‘We’re not doing any of this in isolation’, she said. ‘What we want to do is provide people with whatever they need – whether they’re a client, whether they’re a student – absolute success is them getting a job or getting a better job’. Aspire2 receives about 35% of its revenue from the Tertiary Education Commission (TEC) and MSD, balancing revenue risk in the private sector. ‘What you’re wanting is to have as balanced a wheel as you can have so you can withstand any market changes’, she said. TEC figures show Cornerstone received $5.9 million in 2014, while Ntec’s College of Future Learning received $1.6 million that year, Safety’n Action got $232,000, and Queens Academic Group $145,000”.

Other October Decisions

Long White Cloud Holdings Limited,James George Purnell Dehlsen and Deanna Carol Dehlsen, United States of America (100%), received approval for acquisition of a freehold interest in approximately 53.8 hectares of land at 443 Matakana Valley Rd, Matakana, Rodney District, Auckland. The vendor John Peter Anning New Zealand (100%): consideration was $2,050,000. The OIO states: “The Applicant intends to become resident in New Zealand; and the Investment will provide a residence/studio for work in renewable energy and sustainability-related technologies. It is also intended that the property will be used from time to time for gatherings of experts in relevant technological and scientific disciplines”.

Kia Ora Station Limited,Patrick Gaetan Marie Guesdon, New Caledonia (40%), Odile Marie Clemence Andree Guesdon, New Caledonia (20%), Caroline Natacha Odile Mayerau-Lonne, New Caledonia (15%), Nicolas Bruno Edmond Guesdon, New Caledonia (15%) and Robert John Bryson, New Zealand (10%), received approval for the acquisition of a freehold interest in approximately 16 hectares of land at 164 Ngakoroa Road, Gisborne. The vendor was Margot Barbara Brodie and Gerald Briar Falkner New Zealand (100%); consideration was $560,000. The OIO states: “The Applicant intends to acquire the land to use as a lamb finishing unit for its farm, Kia Ora Station. The Applicant also intends to undertake an environmental initiative on the land to create a wetland area for the purpose of restoring a natural habitat for native species”. See our August 2007 commentary for details of the Guesdon’s original purchase of Kia Ora Station.

And, finally for October, Maohua Ye,China, People’s Republic of (100%), received approval for the acquisition of a freehold interest in approximately four hectares of land at 255 Paremoremo Road, Auckland. The vendor was Gary James Messenger, Michelle Elizabeth Messenger and SW Trust Services (Nine) Ltd as trustees of the Messenger Home Trust, New Zealand (100%); consideration was $8,080,000. The OIO states: “The Applicant intends to acquire the property for use as a home by his family when they visit New Zealand. The Applicant intends to employ a caretaker to look after the property during his absences and enhance the protection of the indigenous vegetation on the property. He also intends to establish a scholarship fund to provide assistance to students in low decile schools in Auckland”.

Loren Baker at radionz.co.nz comments on this approval (1/12/15): “An overseas buyer has been allowed to purchase a multi-million dollar investment home in Auckland, which he won’t live in, after promising to set up a scholarship for children in a low decile school. Other conditions on the purchase of the Paremoremo Road house, which is situated near the prison, include employing a caretaker to look after indigenous plants. According to Auckland Council, the four ha property was valued at $4.05 million last year (2014). It has just been bought for $8.08m by Maohua Ye from China.

“His lawyer said the scholarship would take the form of $5000 grants for three schoolchildren per year and run for four years at a total cost of $60,000. It will go to students at decile 1 Otahuhu College. Principal Neil Watson said he remembered discussions from about three or four months ago about a potential foundation for pupils, but had not heard anything since. The house buyer’s lawyer said the deeds of the foundation were now being finalised, including the selection criteria for children, and the scheme should start next year.

“All the conditions attached to the house purchase have to be underway within 12 months. Another of the conditions was employment – the man’s lawyer said the equivalent of 1.5 full-time positions would be created, as the family would employ a caretaker. The caretaker would look after indigenous vegetation on the property, working with Auckland Council and the Department of Conservation. The Overseas Investment Office (OIO) says overseas buyers have to apply to invest in so-called ‘sensitive’ assets in New Zealand, including sensitive land, and businesses worth over $100m. This application is classed as sensitive land”.

Sweeteners

“RNZ News asked the OIO for more information about the sale and conditions, and whether it was common for investors to offer to set up a scholarship to get their houses, but the OIO was treating the questions as a request under the Official Information Act. There are previous examples of sweeteners pledged by overseas buyers wanting to invest in New Zealand. In June (2015), a British couple were given consent to buy property in the Taupo area. They said they would make regular contributions to a local community group, and fund environmental initiatives.

“In September, an Australian man bought land in Queenstown, saying he would contribute to the Queenstown Trails Trust in its development of a walking and cycling trail through the Wakatipu Basin. When asked how the house on Paremoremo Road had been valued at about $4m last year, but sold for over $8m this year, the buyer’s lawyer said there had been construction work since the house and property was last sold. He said the $8m price tag was close to the real value, and ‘was not a stupid offer’. Local real estate agents have told RNZ News that the most they had heard of homes going for in the area was about $5m, though luxurious rural homes were at a premium now as there was a shortage. The six bedroom house, with a pool and tennis court, will be used by the buyer’s family when they visit the country, but their lawyer declined to say how often that might be”.

Campaign Against Foreign Control of Aotearoa,
P.O. Box 2258
Christchurch.