Foreign investment in Aotearoa/New Zealand
Overseas Investment Office – November 2018 Decisions
First Gas Group Buys Rockgas LPG From Contact Energy
Gas Services NZ Midco Ltd Australian Public 54%; Canada Public 40%; Japanese Public 5%; US Public 1%) has consent to acquire 100% of the shares in Rockgas Ltd from Contact Energy Ltd Ltd (NZ Public 54.4%; Australian Public 18.5%; US Public 13.7%; various overseas persons 8.3%; UK Public 5.1%) for $250,333,000.
The OIO states that Rockgas Ltd is New Zealand’s largest liquefied petroleum gas (LPG) retailer, supplying and distributing to over 84,000 customers through its network. Gas Services NZ Midco is a member of the First Gas Group which operates the North Island gas transmission network and certain gas distribution networks. Gas Services NZ Midco will continue to supply LPG to existing New Zealand customers through Rockgas Ltd’s distribution network.
This will enable Contact to focus on its core business (generation and customer businesses), create value for shareholders, and retain value for “dual fuel” (energy and LPG) customers through a long-term marketing alliance arrangement with Gas Services NZ Midco. Gas Services NZ Midco satisfied the OIO that the individuals who will control the acquisition have the relevant business experience and acumen and are of good character, and the has also demonstrated financial commitment.
See August 2018 consents for Contact’s sale of its gas storage to First Gas Group, then repurchase. First Gas’ Website says it is NZ’s largest gas network. It owns and operates the Maui pipeline and associated assets, and has 2,504 kms of high-pressure gas transmission pipes and 4,800 kms of gas distribution pipes that serve 40 North Island towns and cities. In reporting on this proposed sale, Scoop (31/7/18), stated that Rockgas is NZ’s largest LPG retailer (41% market share) serving 88,000 customers from six branches, three satellite branches as well as a network of 27 franchises.
See March 2007 for Contact’s purchase of Rockgas from Origin, and October 2000 commentary on Rockgas and the LPG market. For OIO consents related to Rockgas, see May and July 1996. For a current overview of supply sources and decarbonisation issues, see papers of the November 2018 GasNZ Industry Forum here .
Aspen Pharmacare (SA) Buys NZ New Milk Formula To Sell To France For China
Aspen Pharmacare Holdings Ltd (various 68%; South Africa 27%; USA 5.1%) has consent to acquire significant business assets, being a further 50% of the shares in New Zealand New Milk Ltd (Aspen Pharmacare already owns 50%) and 100% of the shares in New Zealand New Milk Brands Ltd. The vendor is New Zealand New Milk Holdings Ltd (China 58.5%; NZ 34.2%; various 7.3%). Price withheld under s.9(2)(b)(ii) and s.9(2) (ba) (i) of the Official Information Act, but the combined value of the assets of both companies exceeds $100 million.
The OIO states that Aspen Pharmacare is a global pharmaceutical and nutritional company registered and based in South Africa. Aspen Pharmacare plans to sell its global nutritionals business to transnational dairy products corporation (the OIO does not say who, which is slack) and needs to acquire the shares in New Zealand New Milk Ltd and New Zealand New Milk Brands Ltd in order to complete the on-sale of these shares. Aspen Pharmacare has satisfied the OIO that the individuals who will control the investment have the relevant business experience and acumen and are of good character, and has demonstrated financial commitment.
Wikipedia says Aspen Pharmacare Holdings Ltd is a transnational South African holding company for pharmaceutical concerns, and the largest drug company in Africa, active in HIV-AIDS medicines and criticised for price gouging in several countries, including New Zealand. In May 2017, the European Commission announced it is investigating Aspen’s pricing practices for five life-saving cancer medicines. And this company passed the OIO’s good character test? Aspen New Zealand is part of Aspen Australia, commencing operation in 2003 and for the last ten years partnering with Healthcare Logistics.
MZC Newswire (15/9/18), reveals that the buyer for Aspen’s baby foods manufacturing assets is the privately owned French giant Groupe Lactalis. Lactalis controls Parmalat which has a strong base in Australia and has been a major campaigner against New Zealand’s A2 milk brand.
MZC noted a 2014 announcement by Aspen that it was acquiring a 50% shareholding in New Zealand New Milk Ltd, an infant milk formula producer in Auckland, which is one of a limited number of companies with the required endorsements from the Chinese regulatory authorities to produce infant milk formula for the Chinese market.
In 2017 one of Lactalis’s infant formula production lines became contaminated with salmonella, so to get back into that market, Lactalis paid Aspen $NZ1.3 billion for three factories, in South Africa, Mexico and New Zealand. Only problem being that Aspen only half owns one of the NZ New Milk companies. This consent allows Aspen to buy up the lot, for an undisclosed price. I wonder what NZ New Milk might have got had Lactalis bought it directly?
Pooling Latitude/Gem Debt Derivatives For Offshore Ownership
KVD Hong Kong Ltd (US Public 39%; Deutsche Bank AG, Germany 30%; various overseas 12%; Singapore Public 5.6%; Cayman Islands Public 4.5%; Saudi Arabian Public 4.4%; Canadian Public 2.5%; Swiss Public 1.9%) has consent to acquire significant business assets from Latitude Financial Services Ltd Ltd (US Public 39%; Deutsche Bank AG, Germany 30%; various overseas persons 12%; Singapore Public 5.6%; Cayman Islands Public 4.5%; Saudi Arabian Public 4.4%; Canadian Public 2.5%; Swiss Public 1.9%) for $300 million.
The OIO states that KVD Hong Kong is establishing a securitisation trust in New Zealand through which it will fund receivables with KVD Hong Kong as beneficiary. The pooling and securitisation of receivables will enable KVD Hong Kong to obtain funding from banks to fund its New Zealand business. KVD Hong Kong is part of a group providing finance to customers in New Zealand in the form of credit cards and other financing arrangements.
This group has an established securitisation programme which involves the pooling of consumer receivables and the selling of those receivables to special purpose trusts. KVD Hong Kong has satisfied the OIO that the individuals who will control this have the relevant business experience and acumen and are of good character, and financial commitment has been demonstrated.
So, this is the kind of pooling, repackaging and on-selling of financial debt “derivatives” that caused the 2008 global financial crash. Latitude Financial Services – “NZ’s brilliant alternative to a bank” – is currently running TV ads for Gem Finance, fronted by an aging US actor (Alec Baldwin), that offer Gem Visa credit cards, “personalised” loans, insurance and debt consolidation – i.e. the assets to be pooled and used as security for KVD to borrow from real banks are us and our future repayments.
Latitude Financial Services was registered in NZ in 2015 (briefly called KVD NZ Ltd, then Financial Services NZ Ltd) when a consortium of Värde Partners, Deutsche Bank and KKR bought GE (General Electric) Capital’s Australian and New Zealand consumer finance business (see OIO consent in October 2015 and Latitude’s media announcement of 26/11/15, ). KVD Hong Kong Ltd is a private limited company registered on 19 October 2009 in Hong Kong (but not here).
Note that the OIO summary shows KVD Hong Kong and Latitude have the exact same proportions of ownership nationalities. Latitude’s director listing show links to KVD Australia Pty Ltd as well as Latitude Financial Services Australia Holdings Pty Ltd. This suggests the companies are the same group; part of the Värde/Deutsche Bank/KKR consortium. Is this “investment” part of a corporate musical chairs game that shifts profits and leaves unclear responsibility when the music stops?
US IDEAL Buys Enatel Electronics And Battery Chargers
IDEAL Industries Inc USA 100%) has consent to acquire, via its subsidiary IDEAL Enatel , 100% of the shares of Enatel Ltd and 100% of the shares of Enatel Motive Power Ltd, for more than $100 million from the shareholders of Enatel Ltd (NZ Public 85.1%; Reality Investments Ltd, NZ 14.9%) and the shareholders of Enatel Motive Power Ltd (NZ Public 58.1%; Chargers Ahead Pty Ltd, Australia 20%; Reality Investments Ltd, NZ 12%; EMP Trustee Co. Ltd, NZ 9.9%). Price between $130 million and $140 million.
The OIO states that Enatel Ltd and its subsidiary Enatel Motive Power Ltd are electronics companies based in Christchurch. Enatel is a designer and manufacturer of power electronics. Enatel Motive Power Ltd manufactures battery chargers for the material handling industry, including electric forklifts sold worldwide. US family-owned company IDEAL Industries Inc. manufactures a range of tools and electronics for industrial use.
IDEAL plans to use the existing leadership team of Enatel to continue to operate Enatel’s current business model. However, it intends to achieve collaboration opportunities with IDEAL’s other business units on targeted projects in motive power, energy and solar. IDEAL also intends to utilise Enatel’s research and technology capabilities across its other business units. IDEAL has satisfied the OIO that the individuals who will control the investment have the relevant business experience and acumen and are of good character, and IDEAL has demonstrated financial commitment.
Enatel’s Website highlights recent work: upgrading direct current (DC) power systems for Mighty River Power in NZ; powering long-haul optical equipment across southern Latin America for an Argentinian telecom company; remote site solar equipment for the Middle East and Africa; telecom network equipment in 400 sites in Indonesia; Saudi Arabia’s Manifa Islands construction; generator optimisation in Mozambique; power systems for Qatar’s new international airport; networked surveillance equipment for Mexico City; power systems for a hi-tech sports stadium in Santa Clara, California.
IDEAL’s Website states that in January 2018 it also bought CMD Ltd UK which designs, manufactures and customises products that allow architects and contractors to run power and technology in new construction and retrofit commercial projects. CMD operates in the UK, Europe and Middle East.
Japanese Kenwood Buys Tait Radio Tech
JVC KENWOOD Corporation (Japanese Public 59.1%; US Public 23.9%; UK Public 10%; European Public 6%; Asian/Pacific Public 0.9%; Canada Public 0.1%) has consent to acquire significant business assets, being up to 100% of the ordinary shares in Tait International Ltd, , initially via a 40% acquisition with the option to acquire the remaining 60% at a future date. The vendor is Tait Ltd, (Tait Foundation NZ 99.9%; Tait Contel Charitable Trust, The value of the assets of Tait International Ltd and its 25% or more subsidiaries exceeds $100 million.
The OIO states that Tait International Ltd, a wholly-owned subsidiary of Tait Ltd, is a New Zealand- based radio communications company specialising in voice and data radio technologies, with approximately 95% of its products manufactured in Christchurch. JVC Kenwood is a publicly listed company in Japan. It manufactures and sells a range of electronic products for the automotive sector (e.g. car navigation systems), the public service sector (e.g. products for police and fire fighters) and the media service sector (e.g. video cameras).
JVC Kenwood and Tait International have highly complementary product ranges. JVC Kenwood and Tait International intend to collaborate by leveraging both companies’ technologies, expertise and product ranges to enable them both to expand. JVC Kenwood has satisfied the OIO that the individuals who will control the investment have the relevant business experience and acumen and are of good character, and has demonstrated financial commitment.
Wikipedia says JVC Kenwood Corporation, headquartered in Yokohama, is the result of the 2008 merger of Victor Company of Japan Ltd (JVC), once a subsidiary of the US Victor phonograph company which then introduced TV to Japan and developed VHS video recorders, and Kenwood Corporation which manufactured car, home and personal audio equipment. JVC Kenwood focuses on car and home electronics, wireless systems for the worldwide consumer electronics market, professional broadcast, CCTV and digital and analogue two-way radio equipment and systems.
Angus Tait started work in a radio store before joining the Royal New Zealand Air Force for WW2 and working on radar for the Royal Air Force. Back home, he began building mobile radios and established Tait Electronics in 1969 with a staff of 12. He was knighted in 1999 for his contribution to electronics. Tait now supplies integrated voice and data communications equipment for police, emergency services, utility companies, oil, gas and mining industries, defence and transport, with partners and dealers worldwide.
On 10 December 2018 the Tait Foundation announced the sale of a minority share of Tait International to JVC Kenwood, to meet the capital requirement for research and development to remain a global leader. A portion of the sale proceeds will go back into Tait International for development of cloud-based critical communications and growing global market share. Other funds will go to developing technology capability and industry in Christchurch through Tait companies and donations to educational institutions.
NZ Lifestyles
Tech Investment Executive Buys More Vineyard Land
Aotearoa NZ Fine Wine Estates LP , (USA 100%) has consent to acquire 27.3400 hectares at 5 Swann Road, Lowburn, Cromwell from Roger Simon Gibson and Mary Jean Gibson (NZ 100%) for $2,195,000. The OIO states that Aotearoa NZ Fine Wine Estates is a joint venture between Steve Smith MW, an internationally recognised New Zealand winemaker, and Brian Sheth, co-founder and President of Vista Equity Partners. Aotearoa NZ Fine Wines plans to develop a premium fine wine brand in New Zealand and has acquired the property as part of this strategy.
It has already two other land parcels on which it is undertaking vineyard development works, and also plans to undertake similar works on this land. The benefits that are likely to result include new permanent jobs, oversight and participation by New Zealanders (being Steve Smith MW) and an increase in export receipts. The investment will also increase the productivity of the land and introduce into New Zealand new capital for development purposes for the construction of processing and visitor facilities. Combined, the likely benefits to New Zealand are considered to be substantial and identifiable.
See commentary of September 2017 for Aotearoa NZ Fine Wine Estates LP’s acquisition of land in Canterbury and Hawkes’ Bay, and some background on its owners. Vista Equity Partners is a US-based investment firm with offices in Austin, Chicago, New York City, Oakland, and San Francisco and more than $US44 billion in cumulative capital commitments. Vista invests in software, data, and technology-enabled organisations. It’s a little unclear if Vista is involved in this investment. A quick Web search suggests Sheth may be another Silicon Valley billionaire wanting a post- apocalypse bolt-hole in NZ.
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