Foreign investment in Aotearoa/New Zealand

Overseas Investment Office – December 2018 Decisions

OMV Sucks Up Shell’s Share Of Maui And Pohokura Gas

The Minister for Land Information and the Associate Minister of Finance have granted consent for OMV NZ Ltd (Österreichische Bundes und Industriebeteiligungen GmbH, Austria 31.5%; International Petroleum Investment Co., Saudi Arabia 24.9%; various institutional investors 16.6%; various overseas persons 9.5%; US Public 8.4%; UK Public 5.7%; European Public 3.5%) to acquire:

significant business assets and sensitive land, being up to 100% of the ordinary shares in each of Shell Exploration NZ Ltd, Energy Infrastructure Ltd, Shell Taranaki Ltd; and Shell New Zealand (2011) Ltd , which will result in indirect interests in sensitive land associated with the Maui production station, Pohokura production station, and the Omata tank farm;
significant business assets and sensitive land, being up to 100% of the ordinary shares in Maui Development Ltd and indirect interests in the Maui production station and Omata tank farm.

The vendors are Shell Investments NZ Ltd (UK 75.6%; Europe 24.4%; various overseas 0.1%) and Todd Corporation Ltd (NZ 92.2%; UK 5.9%; various overseas 1.9%). The consideration for the Shell transaction would be approximately $817 million. The assets underlying both the Shell transaction and Todd transaction each exceed $100 million.

The OIO decision summary states that OMV NZ Ltd has been granted consents for two transactions by which it will increase its ownership of the offshore Pohokura and Maui gas fields and the related onshore production and processing facilities. The OMV Group is based in Austria, engaged in producing and marketing oil and gas, and innovative energy and high-end petrochemical solutions. OMV is one of Austria’s largest listed companies with sales of €20 billion and a workforce of around 20,700 employees in 2017.

OMV has existing interests in the Pohokura Joint Venture and the Maui Joint Venture. The first transaction involves OMV buying majority interests in Maui and Pohokura from Royal Dutch Shell. The second transaction involves OMV buying a minority interest in Maui from Todd Energy. After the transactions are complete, OMV will own 74% of the Pohokura Joint Venture and 100% of the Maui Joint Venture. Ministers have decided that these transactions are likely to result in the substantial and identifiable benefits to New Zealand

These benefits include creating significant new employment opportunities and retaining existing jobs for longer than would otherwise be the case, continued support for the national spot market for gas, new capital for the research and development, evaluation, and execution stages of the identified exploration and field life projects, and the protection of historic heritage on the land.

OMV has also undertaken previous transactions that have been of benefit to New Zealand, including:

employing more than 100 individuals;
increased export receipts from Maari field petroleum production;
investing in excess of $1 billion in additional capital; and
consequential benefits to New Zealand as a result of having, and retaining, a high quality and well-resourced international oil and gas operator.

OMV’s Website (sighted 22.3.19) says by the end of 2018 it had 83.75% of Shell’s shares and 6.25% of Todd’s shares in Maui, which was NZ’s largest gas field until 2008 and now meets a third of NZ’s gas needs. It has 74% of the Pohokura gas field having acquired 48% of Shell’s share, and now operates this field on behalf of the other joint venture partner Todd Energy (26%). Pohokura has been in production since 2006 and currently meets about 40% of NZ’s gas demand. So, around three-quarters of the gas used in NZ is OMV’s.

RNZ said in March 2018 that OMV would pay $790 million for Royal Dutch Shell’s remaining interests in this country: its Maui and Pohokura gas field shares, storage facilities and an exploration permit for the Great South Basin. (Shell sold its petrol station network in 2010, becoming locally-owned Z Energy, and its gas and oil pipelines in 2016). This followed a 40% drop in oil prices enabling Shell to buy up Britain’s gas-focused BG group for $US69 billion, to become the biggest oil and gas company on the planet – but not here).

On 11/2/19 RNZ reported that OMV paid Shell only $578 million in the above OIO consented deal and had commenced a three-month “well-intervention and maintenance programme” using a giant Chinese floating rig “o ensure that Pohokura’s wells were producing gas at optimal levels”. OMV also owns NZ’s largest oil well, Mauri, which ships oil directly overseas. In 2015, with EPA consent, OMV ensured optimum production there too, by adding seven additional horizontal hydraulic shafts to the existing well, and the EPA has provided various discharge and other consents since then (see the Environmental Protection Authority website).

Craigmore Buys Gisborne Land For Apples

The Minister for Land Information and the Associate Minister of Finance granted consent to Craigmore Permanent Crop Ltd Partnership (Hong Kong SAR 29.8%; Germany 29.1%; UK 28.5%; Finland 6.8%; USA 3.5%; NZ 1.7%; Ireland 0.5%; various overseas 0.07%) to acquire approximately 59.1889 hectares on Cooper Road, Patutahi, Gisborne, from DW Briant Ltd (NZ 100%) and Peter Donald Briant and Nicholas Anthony Bunting (as trustees of the Briant Farms Trust) (NZ 100%). Price withheld under s.9(2((b)(ii) of the Official Information Act.

The OIO states that Craigmore Permanent Crop is a limited partnership established as a horticulture investment vehicle and is part of the wider Craigmore Farming Group. Approximately 8.6 hectares is currently used for grapes and the remaining arable land is leased for annual crops and pastoral grazing. Craigmore Permanent Crop intends to develop approximately 33 hectares as an apple orchard and continue the same amount in grapes. The stated benefits to New Zealand once the apple orchard has reached maturity include:

creating approximately 20 direct full-time equivalent jobs in developing the apple orchard and pruning and picking apples;
approximately $3.4 million in annual export receipts;
additional investment for development of the apple orchard; and
increased productivity of the land.

Following a declined consent for a kiwifruit orchard in April 2019, this Craigmore application benefits NZ by replacing squash with apples for export. Craigmore’s own Website reports this purchase of Glenpark Orchard in Gisborne, together with 130ha Springhill in central Hawke’s Bay – see consent in February 2019, as creating up to 100 full-time jobs and $30 million in exports of apples.

Craigmore states a point of local difference in the Coxco labour agency, also a Craigmore company, which “aims to create long-term jobs from seasonal opportunities across different fruit and farm sectors”. See Craigmore’s website for Craigmore’s rationale in the raising of funds for its Permanent and Sustainable Partnerships.

Blackstone Billions Buy Viaduct Quarter

Viaduct Holdings IV Ltd Hong Kong SAR up to 51%; Switzerland up to 20%; Canada up to 13%; UK up to 8%; USA up to 6%; Japan up to 3%; Guatemala up to 3%) has consent to acquire significant business assets (exceeding $100m), being 100% of the shares in Wynyard Precinct Holdings Ltd, from Goodman Nominee (NZ) Ltd (US Public 39%; Deutsche Bank AG, Germany 30%; various overseas persons 12%; Singapore Public 5.6%; Cayman Islands Public (NZ 67.3%; Australia 25.5%; various 7.2%) and Reco Aotearoa Private Ltd (Singapore 100%), for $635 million.

The OIO states that Viaduct Holdings is a company specifically created to acquire the shares in Wynyard Precinct Holdings Ltd, which owns seven subsidiary companies that each own a commercial office building in Wynyard Quarter, Auckland CBD. The acquisition of Wynyard Precinct Holdings advances its investment objectives. Viaduct Holdings 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 to the investment.

The vendor Goodman is a global property group listed on the ASX, that owns, develops and manages industrial real estate in 16 countries, including NZ. See May 2018 commentary re selling on its various Auckland developments, in this case to an off-shore private equity fund. The Companies Register lists the ultimate holding company of Viaduct Holdings IV as the Blackstone Group LP, an American transnational private equity, alternative asset management and financial services firm based in New York City.

As the “largest alternative investment firm in the world”, Blackstone’s Website says it specialises in private equity, credit and hedge fund investment strategies and, as of 31 December 2017, had $US434 billion under management. Blackstone includes a NZ-based Hospitality Group established in 2007 that specialises in hospitality and property management and services in the Australasian and South Pacific regions. See also commentaries of June 2016 for Blackstone buying NZ retirement villages (as Four Five NZ Ltd); August 2016 buying Immortality life and medical insurance, February 2015 acquiring the NZ assets of Orico Chemicals, and October 2011 for buying Burger King.

Keppel Capital Fund Buys Ixom Chemicals From Blackstone

IX Infrastructure Pty Ltd (Singapore 44.4%; Asia ex Singapore 1.6%; UK 2.8%; Europe 0.7%; North America 5.1%; various overseas 45.4%) has consent to acquire significant business assets, being 100% of the shares of Ixom HoldCo Pty Ltd from the Existing shareholders of Ixom HoldCo Pty Ltd from the Blackstone Group LP, USA 91.9%; Australian Public 8.1%) for $233,197,806. The OIO states that IX Infrastructure is a special purpose vehicle of the Keppel Infrastructure Trust , which manages core infrastructure assets and is listed on the Singapore Stock Exchange.

Ixom HoldCo Pty Ltd is an Australian holding company in the water treatment and chemical supplies industry. Its subsidiaries include Ixom Operations Pty Ltd, New Zealand’s largest chemical distributor. IX Infrastructure wishes to develop and grow Ixom’s water treatment and chemical manufacturing business in New Zealand. It 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 to the investment.

Ixom was separated from Orica Australia Pty Ltd in 2015, when Blackstone acquired it (see February 2015 consents). Its main NZ facility at Mt Maunganui had been refurbished in 2014 . Ixom’s Website says it is the market leader in water treatment and chemical distribution in Australia and New Zealand, and expanding in the US and South America, China, Hong Kong and Indonesia.

Orico water treatment originated in the US, while the Australian base was once ICA (Imperial Chemical Industries). Keppel Infrastructure Trust describes itself as offering investment opportunities in “core infrastructure assets located in jurisdictions with well-developed legal frameworks that support infrastructure investment” – like NZ. The investment in Ixom brings KIT’s portfolio up to over $NZ5.5 billion. KIT merged with CitySpring Infrastructure in May 2015 and is wholly owned by Keppel Spingapore’s business trust structures, legislated in 2004, allow distribution to shareholders from operating cash flow.

Hong Leong Group Buys Equity Fund That Owns Manuka Health

Guoco Group Ltd (Guoline Overseas Ltd 71.9%; Elliott Capital Advisors, USA 9%; First Eagle Investment Management LLC, USA 7%; Credit Suisse Group, Switzerland 6.1%; various overseas 6%) has consent to acquire 100% of the shares of Pacific Health Group TopCo1 Ltd , from “certain overseas investment funds managed and/or advised by Pacific Equity Partners Pty Ltd, an Australian incorporated private equity fund manager, PEP’s affiliates and various New Zealand based senior managers of Manuka Health NZ Ltd“, for $269 million.

The OIO states that Guoco Group is registered in Bermuda and publicly listed in Hong Kong. It is majority owned by Hong Leong Company (Malaysia) Berhad, a public limited company that is one of the largest conglomerates in South East Asia. This involves Guoco’s acquisition of shares in Pacific Health Group TopCo1 Ltd, which is the parent company of Manuka Health NZ Ltd, which manufactures and distributes Manuka honey and other Manuka related products.

Guoco Group intends to engage Pacific Health Group TopCo1 Ltd in international market expansion opportunities. The current employees of Manuka Health will be retained for day-to-day running of the business. Guoco 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 Guoco has demonstrated financial commitment to the investment.

Guoco Group Ltd describes itself as an investment holding company with operations and investments covering Asia and Europe. The Group including subsidiaries and associated companies is primarily involved in principal investment activities, property development and investment, hospitality and leisure operations and financial services… to achieve superior, long term sustainable return to shareholders. Which is a bit different from the eulogising of natural environments, bees and health on the now-deregistered Manuka Health NZ Ltd’s Website. So much for protecting “Manuka” from off-shore predation.

CDL Land Residential Development In Hamilton

CDL Land NZ Ltd , (Singapore 53.3%; NZ 40%; USA 3.3%; UK 0.7%; various 3.8%) has consent to acquire 20.2356 hectares at 59 Greenhill Road, Parkwood, Hamilton, from PCL Ltd (NZ 100%) . Price withheld under s.9(2)(a) and s.9(2)(b)(ii) of the Official Information Act. The OIO states that CDL Land NZ plans to develop a subdivision of approximately 303 residential sections of various sizes for sale on the open market.

The land will be developed in conjunction with adjoining much larger subdivision already owned by CDL. Benefits stated as likely to result from this are additional job opportunities, additional investment into New Zealand for development, additional residential housing, oversight of and participation in the investment by New Zealanders, and added efficiency due to conjunction with the adjoining development.

CDL Land NZ is a subsidiary of CDL Investments NZ whose principal activity is the development and sale of residential land. It currently has projects in Hamilton, Hawkes Bay, Queenstown and two in Christchurch. CAFCA has documented a series of OIO consents for CDL for various land developments and hotel investments for over two decades, including ex-public Landcorp property in October 1994.

CDL is a majority-owned subsidiary of NZX-listed Millennium & Copthorne Hotels NZ Ltd. See commentary of December 2017 for increased ownership of Millennium & Copthorne by City Development Ltd which is 48% owned by the Hong Leong Group, Singapore. The Hong Leong Group’s core businesses are property development, hotels, financial services (including Hong Leong Bank, Malaysia), and trade and industry, with S$40 billion in assets and 40,000 employees worldwide.

Adamantem Capital Buys Up Hellers Meats

Adamantem Capital Management Pty Ltd as manager of the Adamantem Capital Fund 1 Entities, Australia 53.9%; US 25.8%; NZ 3.4%; UK 1.7%; Singapore 10.1%; Luxembourg 5.1%) has consent to acquire significant business assets, being up to 77% of the shares of Hellers Ltd through the subscription of shares in HLRS ParentCo Ltd, and up to an additional 14% of the shares in Hellers Ltd on pro-rata proportions as a result of the Put Option being exercised, from Harakeke Nominees Ltd, Lynda Maree Harris and Nicola John Harris (NZ 100%), Fraser Todd Heller and Kendons Trust Services (NZ 100%)and Rangatira Ltd (NZ 100%.) Price withheld under s.9(2)(b)(ii) but in excess of $100 million.

The OIO states that Adamantem Capital Management Pty Ltd is the manager of the Adamantem Capital Fund 1 Entities, a multi-entity investment group that typically invests in entities worth between $100 million and $500 million in Australia and New Zealand. Hellers is a New Zealand based business that specialises in processed meat products.

One of the vendors, Fraser Todd Heller, will reinvest in Hellers Ltd along with third party NZ entity, FNZC Principal Investments Picasso LP. The Overseas Investment Office is satisfied that the individuals who will control the investment have the relevant business experience and acumen and are of good character, and Adamantem has demonstrated financial commitment to the investment. Hellers is NZ’s leading brand of sausages, bacon, ham and small goods. Scoop (25/9/18) reported that Adamantem will enable Hellers to accelerate its growth strategy for both Hellers products and Moira Mac’s, a chicken meat business Heller recently acquired in Australia.

Scoop also reported (26/7/18) that Rangatira, a Wellington investment firm, increased its control from 50% to 63% of Hellers shares in late 2015, paying $9.5 million for the extra stake and valuing the investment at $52.2 million at the time. The Adamantem acquisition requires Australia’s Foreign Investment Review Board approval as well as OIO consent. See also commentaries of March, April, May and November 2018, and July 2017 for Adamantem’s acquisition of New Zealand retirement care facilities.

Japanese Family Buys Wairarapa Organic Wines

Nishi Sake Selling Co. Ltd ,(Japan 100%) has consent to acquire 40.0798 hectares at 800 East Taratahi Road (Urlar Estate) alternative address 140 Dakins Road, East Taratahi, Carteron; and 2.0750 hectares at 61 Dakins Road, East Taratahi, Carteron, from Urlar Farms Ltd (NZ 76%; Singapore 24%) and Thomson Family Trust (NZ 100%) for $8.75 million.

The OIO states that Nishi Sake is a Japanese family company which has specialised in distilled beverage production for eight generations. Nishi Sake recently expanded its product range to include sake, bottled water and Japanese soda drinks and wishes to add New Zealand wine. Nishi Sake believes that its strong beverage distribution network in Japan (including a substantial number of restaurant clients) can make Urlar Estate a well-known premium brand in New Zealand and overseas.

Benefits that are likely to result from the acquisition include creation of new jobs (50% staff increase at the vineyard), additional funds to develop a new barrel room and cellar, a five-fold increase in export receipts within the next five years, and funding two New Zealand students through a Bachelors or Masters level course in viticulture and oenology at Lincoln University. These likely benefits are considered substantial and identifiable.

Urlar was established in 2004 when Angus and Davina Thomson planted 30 hectares of vineyards, in pinot noir, sauvignon blanc, pinot gris and riesling. Urlar applies organic and biodynamic principles and currently exports 75% of its wine. Nishi Sake Brewing is an eighth generation family business founded in 1845.

US Family Buys Central Otago Wines

Foley Family Wines Ltd ,(William P Foley II and Carol J Foley, USA 57.5%; NZ Public and various, NZ 17%; NZ Central Securities Depository Ltd, NZ 16.5%; US Public 3.3%; Tony and Deidree Anslemi Family Trust, NZ 2.1%; William Patrick Foley II, USA 2.1%; Anthony Mark Turnbull, NZ 1.5%) has consent to acquire approximately 70.5305 hectares of freehold and 109.8143 hectares of leasehold land in Central Otago being the Mt Difficulty Wines vineyard. The vendor is Mt Difficulty Wines Ltd (NZ 100%) and the price $52 million.

The OIO states that Foley Family Wines is NZX listed and owns a number of vineyards including Martinborough Vineyard, Te Kairanga Vineyard and Grove Mill Winery. It is majority owned by Bill Foley and his related entities. Bill Foley is a US based investor with a number of NZ investments, particularly in the hospitality sector. Foley Family Wines is acquiring the Mt Difficulty Vineyard to expand their portfolio to include a premium pinot noir.

It intends to leverage its existing export networks to increase exports of Mt Difficulty products, by cross-marketing Mt Difficulty products with its existing wine labels. Foley Family Wines intends to continue Mt Difficulty Wines’ plans to develop the restaurant and cellar door facility at the Vineyard, and also to develop a restaurant at their Te Kairanga Vineyard in Martinborough.

Foley is likely to introduce additional investment to develop the restaurants along with a barrel facility at Te Kairanga and upgrades to the Grove Mill Winery. They will create nine jobs as a result of the investment, mostly in the Wairarapa and Marlborough regions. As Foley Family Wines is NZX listed with approximately 30% NZ ownership, it is considered that New Zealanders will have oversight and the ability to participate in the investment

The Mt Difficulty Vineyard is at 73 Felton Road, Bannockburn, near Cromwell in Central Otago. From 1984 William P Foley held board and executive positions in Fidelity National Financial, a Fortune 500 mortgage company based in Florida. He chairs Foley Family Wines Holdings which has 500 acres of vines in California.

James Hardie Buys Kaipara Sand Source

James Hardie NZ (Australia 49%; USA 29.3%; UK 4.1%; Europe 4.9%; Asia 4.2%; other 8.5%) has consent to acquire approximately 61.4665 hectares at 353 McLachlan Road, Kaukapakapa, Auckland, from Raj Design Ltd (NZ 100%) for $2.7 million. The OIO states that James Hardie NZ operates a building materials manufacturing business and is acquiring the land as a source of silica sand for its future manufacturing operation producing fibre cement products in New Zealand with locally sourced silica sand. James Hardie NZ proposes to develop and operate a silica extraction facility and sand washing facility on the land. Benefits to New Zealand include:

the retention of 3-4 production jobs, along with 4-5 construction jobs for approximately one year);
increased processing of a primary product relating to the manufacturing of building materials;
additional investment for development purposes of approximately $7 million; and
added market competition (producing competitively-priced products) and greater efficiency (reducing transport time and costs involved with the extraction and manufacturing process).

Raj Design Ltd is a specialist in hotel design and fitout and retail & shopping centre planning, with directors Gillian and Ross Webb. Ross Webb is also director of Worldwide Parking Ltd, which develops and licenses pre-cast concrete construction technology – which is, no doubt, where the sand comes in. James Hardie’s Website describes it as a global leader in fibre cement. In June 2018 James Hardie lost its appeal against a court decision allowing owners of homes and retirement villages to claim $250 million for faulty Harditex, Monotek and Titan cladding.

Consent For Hobby Farm Declined

Xiaoyan Zhu (China, PR 100%) was declined consent to acquire 11.8803 hectares at 314 Matua Road, Kumeu, from Ian Lee Hart, Renai Erica Hart and KD Hart Trustees Ltd as Trustees of the I&R Hart Family Trust (NZ 100%). Proposed price withheld under s.9(2)(b)(ii) of the Official Information Act. The OIO states that the land is currently operated as a hobby farm and equestrian centre.

The applicant is a Chinese national who intends to operate the land as a hobby farm and stables, with contractors from the existing stables engaged as employees and additional household staff engaged. The likely benefits proposed by the applicant included up to 4.7 fulltime equivalent jobs; 2.6 hectares of pasture replanted in native vegetation; and a covenant placed over a stand of totara trees. The overall assessment, having regard to the rural land directive, was that the overseas investment was likely to benefit New Zealand but that benefit was not “substantial and identifiable”.

Consent 201810166 Granted, All Details Withheld

Consent granted to acquire business assets in excess of $100m, being a leasehold interest… who knows what from whom. All information withheld under s.9(2)(b)(ii) of the Official Information Act. Nonetheless, the OIO states that the applicant has satisfied it that the individuals who will control the Investment have the relevant business experience and acumen and are of good character, and has also demonstrated financial commitment to the investment.

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