Foreign investment in Aotearoa/New Zealand

Overseas Investment Office – March 2017 Decisions

Overseas Profits From Government Sale Of Public Land For Housing

Fletcher Residential Ltd (various overseas 29%, NZ Public 28%, Australian Public 19%, US Public 17%, UK Public 7%) or the Moire Road Limited Partnership has consent to acquire up to 197 residential allotments, being a subdivision of approx. 9.2 hectares at 73-89 Moire Road, Massey, Auckland. The vendor is Her Majesty the Queen through the Ministry of Business Innovation & Employment (MBIE) (NZ 100%). i.e., this is a sale of Crown land (though news to me that the Queen is 100% NZ).

The price is $18 million. MBIE is leading a programme of work “on behalf of Her Majesty the Queen” to identify vacant and underutilised Crown-owned land in Auckland available for housing development and to facilitate development as quickly as possible in collaboration with other parties.

The overarching objective of this Auckland Crown Land Development Programme is to contribute to rapidly relieving supply pressure in the Auckland housing market by having additional new houses built on Crown land as soon as possible. The land at 73-89 Moire Road, Massey, is the first of a number of sites in MBIE’s development pipeline.

MBIE has established three panels of developers capable of delivering low, medium and high-density housing. Fletchers was offered the land as the first ranked developer on the low-density housing panel. Fletchers and Ngāti Whātua Orakei Whai Rawa Ltd have agreed to establish a “Moire Road Limited Partnership” to undertake development of the land.

Fletchers will contribute 51% and Ngāti Whātua 49% of the capital required. Fletchers and Ngāti Whātua will appoint Fletchers as development manager. If the Moire Road Limited Partnership is not established, Fletchers will proceed by itself. Fletchers intends to develop 197 residential lots, of which either the Applicant or the Moire Road Limited Partnership will:

Acquire 138 of the Lots to build residential dwellings for on-sale to third party purchasers; and
Build “affordable” homes on 59 of the lots which will either be retained by the Crown or, at the Crown’s option, be acquired by Fletchers or the Moire Road Limited Partnership to first offer for on-sale to community housing providers or to third party purchasers who meet specific eligibility criteria before they can be sold on the open market.

The transaction satisfied the s.16 criteria of the Overseas Investment Act 2005, with “benefit to New Zealand” under 17(2)(a)(iv) greater efficiency of the Overseas Investment Act 2005 and Regulations 28(a) consequential benefits, 28(c) adversely affect New Zealand’s image overseas, 28(e) previous investments, 28(f) advance a significant Government strategy, 28(j) oversight and participation by New Zealanders.

So, it appears that Ngāti Whātua is involved in the development but not in the actual ownership of the land. The applicant for this consent is just Fletchers, now owned offshore. Something about all this reminds me of Donald McLean and Crown pre-emption of land sales after the Treaty of Waitangi. Sort of in reverse, but I expect eventually the usual results –the land in the hands of rich Pakeha and profits offshore.

Australia Profits From Public-Private Schools

ShapEd NZ Hold LP, ShapEd NZ Hold GP Limited, ShapEd NZ LP and ShapEd NZ GP Limited, collectively the ShapEd Consortium (Public Infrastructure Partners II LP, NZ Zealand 78%, Pacific Partnerships, Australia 22%) has consent for a leasehold interest in approx. 17 hectares for the purpose of constructing and maintaining four new schools, where the consideration for such rights exceeds $100 million, and the establishment of a business in New Zealand where the total expenditure required before commencing business exceeds $100 million. The lessor is the Ministry of Education (NZ Govt, NZ 100%).

The ShapEd Consortium Applicant is leasing land for the purpose of constructing and maintaining four new schools under the New Zealand Schools PPP number 3 Project. They were chosen by the Ministry as the preferred bidder to undertake the project. It will be undertaken through a public private partnership whereby ShapEd will be required to:

design, contract and finance six new schools (four of the schools would be located on sensitive land) throughout New Zealand; and
once the school is completed, manage and maintain the schools for a 25-year term.

Consent by the OIO was required because Pacific Partnerships will have the power to appoint one out of four directors in ShapEd and have control rights in ShapEd in excess of a 25% ownership interest. The transaction satisfied the s.16 and s.18 criteria of the Overseas Investment Act 2005, with “substantial and identifiable benefit to New Zealand” under s.28(a) consequential benefits, s.28(c) affect image, trade or international relations, s.28(f) advance significant Government policy or strategy, s.28(j) oversight and participation by New Zealanders under the Overseas Investment Regulations 2005.

“ShapEd consortium is led by Morrison & Co, who also led PPP consortiums that have delivered multiple schools under the previous two schools PPP contracts. Earlier in 2017, a Morrison & Co-led consortium delivered Haeata Community Campus in Aranui (Christchurch), Rolleston College and Ormiston Junior College. …Many New Zealanders are investors in a Morrison & Co PPP fund through their investments in the funds’ owners, which include superannuation funds and local community trusts” (Scoop, 3/5/17).

The five new schools are in Auckland, Hamilton and Christchurch. The contract allows for further schools to be added to the contract subject to demonstrating value for money to the Ministry (see ‘Morrison & Co awarded contract for five new schools under Public Private Partnership‘ and Bill Rosenberg, “Public Private Partnerships: What And Why”, in Watchdog 136, 2014).

Japanese Lion Leases More Land In Marlborough

Lion Beer Spirits & Wine (NZ) Ltd (Japanese Public 78%, US Public 9%, various overseas 6%, UK Public 5%, Australian Public 1%) has consent to acquire a leasehold interest in 14 hectares at 21 Blicks Road, Marlborough from Wodecroft Ltd (Donald Ernest John Elley and Kathleen Cecil Elley, NZ 100%), at a price of $1,717,235. Lion is leasing the land to increase its guaranteed grape supply as it expands its wine production facility in Marlborough.

The transaction satisfied the s.16 criteria of the Overseas Investment Act 2005, with “substantial and identifiable benefit to New Zealand” criteria under s.17(2)(a)(iii) increased export receipts, s.17(2)(a)(iv) greater efficiency or productivity, s.17(2)(a)(vi) increased processing of primary products of the Overseas Investment Act 2005, and Regulations 28(e) previous investments and 28(g) enhance the viability of other investments (low weighting). Historically, and still, NZ’s largest alcohol company, Lion has been Japanese-owned since 1998. See our commentaries of September 2000, February 2001 and January 2015 on OIO consents for Lion since then.

Japanese Koyama Wines Buys Leased Land

Koyama Wines Ltd (Izumi Sawada, Japan 94%, Yasuhiro Horii, Japan (6%), Takahiro Koyama, Japan 0.5%) has consent to purchase approx. 30 hectares at 454 Omihi Road, Waipara, north of Christchurch, from Mountford Estate Limited (Cornelis Gusbertus Zeestraten, NZ 100%), at a price of $2.7 million.

Since Koyama Wines was incorporated in 2013, its focus has been on making Pinot Noir and Riesling wines using grapes sourced from local growers in the Waipara Valley. Grapes have been purchased by the tonne from local vineyards, and processed using leased winemaking equipment from a Waipara-based winemaker under the “Koyama Wines” label. Most of the wine is exported to Japan, with a small amount sold to local Japanese restaurants and individuals in New Zealand.

As well as an agreement to purchase of the land, Koyama Wines has an interdependent agreement with Mountford Vin Waipara Ltd to purchase the Mountford Estate’s business assets. Koyama wishes to develop its winemaking business and expand the scale of wine production under both the Mountford and Koyama Wines labels. Owning this vineyard and winery on the land will allow Koyama greater control over the grape growing and winemaking process than its current leasing arrangements. Koyama also intends to provide accommodation and host dining functions.

The transaction satisfied the s.16 criteria of the Overseas Investment Act 2005, with “substantial and identifiable benefit to New Zealand” under s.17(2)(a)(i) jobs, s.17(2)(a)(iii) increased export receipts, s.17(2)(a)(iv) greater efficiency and greater productivity., s.17(2)(a)(vi) increased processing of primary products, s.17(2)(e) walking access, and Regulations 28(a) consequential benefits and 28(e) previous investments.

Singaporean To Build 52 Storey Hotel In Auckland

NDG Asia Pacific (NZ) Ltd (Ding Furu, Singapore 100%) has consent to invest in significant business assets, being the establishment of a business in New Zealand where the total expenditure required before commencing business exceeds $100m. NDG Asia Pacific will construct and operate a Ritz-Carlton Hotel on the corner of Elliott, Albert and Victoria Streets, Auckland, which was purchased NDG Asia Pacific in May 2012.

The hotel development is expected to cost in excess of $350 million, including cost of the land. It will be a 52 storey hotel, including six storeys of retail podia (sic), four stories of hotel facilities, one basement level for shopping and five basement levels for car parking. The hotel will have approximately 300 guest rooms and be branded as a five-star Ritz-Carlton Hotel. The overseas investment transaction satisfied the s.18 criteria of the Overseas Investment Act 2005.

In January 2010 Ding Furu received consent to purchase 1,921 hectares near Puhoi, Northland and in January 2012 28 hectares in Waitakere, intending to live here. He is founder and Chairman of New Development Group, a large Chinese-based transnational with interests in real estate development, hotels, wood, storage, and trade and investment. See our commentaries of January 2010 and January 2012.

Tiong Family Malaysia Buys Land For Whenuapai Development

Neil Construction Ltd (Tiong Hiew King, Malaysia 26%, Tiong Ik King, Malaysia 14%, Thai King Tiong, Malaysia 12%, Estate Tiong Yung King, Malaysia 12%, Tiong Kiong King, Malaysia 12%, Estate Tiong Kiu King, Malaysia 11%, Chia Lai Mei, Singapore 10%, Bring Rich Corporation Inc, Singapore 1%, Tiong Chiong Ong, Malaysia 0.75%, Tiong Chiong Hoo, Malaysia 0.75%, Law Cheng King, Malaysia 0.2%) has consent to acquire approx. 14.6 hectares at 101 and 107 Totara Road and 9 McKean Road, Whenuapai, Auckland, from Gregory Allen Leighton (NZ 50%) and Anne Lynette Leighton (NZ 50%) Grace McKean, Mervyn McKean and Linda McKean (NZ 100%) and Peter Kevin Hood (NZ 100%).

Neil Construction intends to develop the land into approx. 225 residential sections for sale which will include the development of a pedestrian and cycle pathway along the waterway beside the land. The Tiong family, through its subsidiaries, New Zealand King Salmon, Ernslaw Group and the Neil Group, have previously undertaken investments in New Zealand that have been of benefit. This includes the employment of hundreds of people in New Zealand. Neil Construction also intends to remove pine trees to be replaced with native trees, contributing to the Ark in the Park project which will assist in the eco-restoration of a corridor of bushland nearby.

The transaction satisfied the s.16 criteria of the Overseas Investment Act 2005, with “substantial and identifiable benefit to New Zealand” under s.17(2)(e) walking access, and Regulations 28(a) consequential benefits and 28(e) previous investments. Use the CAFCA Website search engine to see consents for other Tiong Family development projects.

Tiong Family Malaysia Buys Waihopai Land For Forestry

Ernslaw One Ltd (Tiong Hiew King, Malaysia 26%, Tiong Ik King, Malaysia 14%, Estate Tiong Yung King, Malaysia 13%, Thai King Tiong, Malaysia 12%, Tiong Kiong King, Malaysia 12%, Estate Tiong Kiu King, Malaysia 11%, Chia Lai Mei, Singapore 10%, Bring Rich Corporation Inc., Singapore 1%, Tiong Chiong Ong, Malaysia 0.8%, Tiong Chiong Hoo, Malaysia 0.8%, Tiong Family, Malaysia 0.5%, Law Cheng King, Malaysia 0.2%) has consent to acquire approx. 910 hectares at 3093 Waihopai Valley Road, Marlborough from Niven Holdings Ltd (Stephanie Gaye Niven, NZ 50%, Peter Campbell Niven, NZ 50%). Price: $2,300,000.

Ernslaw One is a forestry and timber processing business operating in various locations throughout New Zealand. It intends to convert the land from a sheep and beef farm with some plantation forestry established on it to entirely plantation forest. It intends to invest substantial additional capital for development to prepare and plant the Land in radiata pine forest and to obtain Forest Stewardship Council certification for the land, which will ensure it is managed in an environmentally sustainable manner.

The transaction satisfied the s.16 criteria of the Overseas Investment Act 2005, with “substantial and identifiable benefit to New Zealand” under s.17(2)(a)(i) jobs, s.17(2)(a)(v) additional investment for development purposes of the Overseas Investment Act 2005 and Regulations 28(a) consequential benefits, 28(e) previous investments, and 28(f) advance significant Government policy or strategy. See also our commentaries of February 2003 and May 2006 on other Tiong family forestry.

The Tiong family is a frequent flyer with the OIO for consents to purchase land for forestry and for suburban developments. Please use the CAFCA Website search engine to review over 100 entries for “Tiong”. Ernslaw One came third in the 2004 Roger Award.

US Brand Company Buys Sistema Plastic

NBS Holdings Ltd (US Public 87%, UK Public 4%, Canadian Public 3%, Japanese Public 1%, Norway Public 1%, Swiss Public 1%, various overseas 3%) has consent to acquire significant business assets, being up to 100% of the issued share capital in Hanger Holdings Limited, for which the price exceeds $100 million. The vendors are Lindsay Investment Trust and Alton Trust (NZ 100%). The purchase price is $660 million.

NBS Holdings is a wholly-owned subsidiary of Newell Brands Inc., a global marketer of consumer and commercial products including Paper Mate®, Sharpie®, EXPO®, Parker®, Marmot®, Sunbeam®, Mr. Coffee®, Rubbermaid Commercial Products®, Graco®, Baby Jogger®, NUK®, Rubbermaid®, and First Alert®.

Hanger Holdings Ltd is the holding company of Sistema Plastics Ltd and its subsidiaries. Sistema operates in New Zealand as a designer, manufacturer and global supplier of a range of plastic food and beverage storage containers and plastic storage containers. Newell intends to continue to:

operate Sistema as a stand-alone business and brand within Newell’s portfolio of household goods businesses;
accelerate the growth of the Sistema brand in the United States; and
use Sistema’s new facility in New Zealand to manufacture products for other brands currently within the Newell portfolio, and to provide the platform to rapidly grow its United States-based business. The transaction satisfied the s.18 criteria of the Overseas Investment Act 2005.

Sistema started, in a Cambridge garage, 34 years ago and now has award-winning industrial premises in South Auckland. NBS registered as a NZ company in December 2016. Newell Brands, based in New Jersey, describes itself as a “growth-led global consumer products company”. It grows by acquiring other company’s registered brands, from a curtain rod company in 1903 to its current wide range from pens and playing cards to household, cleaning and sports goods – a lot of them involving plastic. It went global, including e-commerce, from 2012, and in 2016 reported net sales of $US13.3 billion. “We win as one operating company that has the scale to outgrow, out execute and out spend our competition”.

China And Australia Take Over Lower Hutt Private Hospital

Healthe Care Australia Pty Ltd (Luye Investment Group Co Ltd, PR of China 98%, various overseas persons 2%) has consent to acquire 100% of the ordinary shares of Pulse Health Ltd, which has a leasehold interest in approx. 0.7 hectares at 666-672 High Street, Lower Hutt. The sellers of the leasehold right are the existing shareholders of Pulse Health Ltd (Australian Public 85%, various overseas 14%, UK Public 1%, North American Public 0.58%, European Public 0.03%). Price: $129,310,646.

Chinese-owned Healthe Care is Australia’s third largest for-profit private hospital operator, with 35 hospitals in Australia. Healthe Care recently made a takeover offer for Pulse, a public company listed on the Australian Securities Exchange. The leased land in Lower Hutt is the location of Boulcott Hospital, a private hospital that is part of Pulse’s portfolio of businesses.

Healthe Care states that its scale, existing relationships with suppliers and centralised procurement system are likely to mean discounts for Boulcott Hospital on hospital equipment and consumables. The transaction satisfied the s.16 criteria of the Overseas Investment Act 2005, with “benefit to New Zealand” under s.17(2)(a)(iv) greater efficiency of the Overseas Investment Act 2005, and Regulation 28(c) affect image, trade or international relations.

Boulcott Clinic was New Zealand-owned until 2012 when it and its land were sold to Boulcott Hospital Ltd, a created subsidiary of Evolution Healthcare Partners Pty Ltd (Australian 100%) – see our commentary of November 2012. In June 2016 Boulcott Hospital Ltd (by then Australia 60%, US 39%, NZ 1%) was sold as a requirement of Commerce Commission approval for Evolution Healthcare to take full ownership of Acurity Healthcare, owner of Bowen and Wakefield Hospitals, which would give it too much control over the Wellington market.

Pulse Health Ltd (Australia 97%, NZ 2%) acquired the hospital business and a leasehold interest in 0.7 hectares of the land, with the freehold going to Vital Healthcare Property Limited, which owns five other medical premises in other regions, leasing out operation of the hospitals. See commentary of June 2016.

The Luye Group began as a pharmaceutical company in 1994, listed as a public company in 2004 and took a great leap overseas in 2005-7. Its medical group includes Bobath Hospital in the UK, and in Korea a plastic surgery hospital for women and children and a dental hospital. It bought Healthe Care in 2015 for $A938 million, and Healthe Care took over Pulse Health after a drop in Pulse’s share price – bringing Healthe Care and Luye into the growing private health care market in NZ.

NPT And Kiwi Property Get Consent But Don’t Merge

NPT Ltd (NZ Public 71%, various overseas 29%) got consent to acquire significant business assets, being property in New Zealand used in carrying on business in New Zealand for consideration exceeding $100 million. The property is the Majestic Centre, 88-122 Willis Street, Wellington (to be acquired by NPT 10 Limited), and the North City Shopping Centre, 2 Titahi Bay Road and Lyttelton Avenue, Porirua (to be acquired by NPT 11 Limited). The vendor is Kiwi Property Holdings Ltd (NZ Public 74%, US Public 14%, Australian Public 4%, UK Public 3.5%, European Public 3%, Asian Public 1%). Price $230 million.
NPT is an NZX-listed company with a diverse property portfolio across retail, industrial and commercial buildings throughout New Zealand. The transaction has satisfied the s.18 criteria of the Overseas Investment Act 2005. The consent for this sale related to a proposed merger between NPT and the $1.7 billion Kiwi Property Group that didn’t go ahead.

The plan was that NPT would double its size by buying the two buildings from Kiwi. Kiwi would take a 19.9% stake in NPT via the issue of new shares, and NPT would sell its management rights to Kiwi for $6m. NPT shareholders voted against the deal and booted the Chair and one Director off their Board, replacing them with the Chair of NPT’s largest single shareholder Augusta Capital and two others (NZ Herald 21/4/17).

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