Foreign investment in Aotearoa/New Zealand
Overseas Investment Office – March 2020 Decisions
New Forests Private Equity Buys Forestry Right At Wairakei
Zentral Estate Ltd has consent to acquire a forestry right over approximately 7,292.7 ha. at State Highway 5, Off Road Highway and Broadlands Road, Taupo, from Wairakei Pastoral Ltd (NZ 100%). Price withheld under s.9(2)(b)(ii) of the Official Information Act. Zentral Estate is owned by ANZFF3 Ltd which is wholly owned by ANZFOF3 NZ Pty Ltd which is ultimately owned by The Trust Company (Australia) Ltd as trustee for the New Forests Australia New Zealand Forest Operating Fund 3 which is wholly owned by certain overseas investment funds, and managed by New Forests Asset Management Pty Ltd.
The OIO states that Zentral Estate applied for consent under the special test for forestry activities in s.16A(4) of the Act. The land is part of the wider “Wairakei Estate” and made up of existing mixed-age forestry and land no longer required by the vendor for pastoral farming. Some areas of the existing forest are subject to an existing forestry right and will be handed over to Zentral Estate as bare land over a period of time.
Zentral Estate will plant these areas as well as the grazing land in pinus radiata. It will continue to maintain existing arrangements, including public access to hunting blocks. It intends to harvest the existing crop of trees, then hand the land back to Wairakei Pastoral, as the forestry right does allow replanting.
New Forests’ multi-layered corporate tower gets increasingly elaborate, with Zentral just one brick in an insulating wall. In October 2019 an RNZ investigation listed New Forests as NZ’s third largest owner, achieved in less than five years under various “Estate” subsidiary names. In this case they are not responsible for the land, just the cutting down of its trees. See Foreign Control Watchdog 136, (September 2014) for background on forestry’s earlier privatisation, financialisation and poor health and safety record.
China Forestry Group Buys RMS FGI And Its Remutaka Forestry Rights
CFPC (Singapore) Pte. Ltd (Government of China PR 100%) has consent to acquire 100% of RMS FGI New Zealand Ltd from RMS Forest Growth International LP (Luxembourg Public 52%; Germany Public 43%; US Public 5%). Price withheld under s.9(2)(b)(ii) of the Official Information Act. The OIO states that CFPC has applied under the special test for forestry activities in s.16A(4) of the Act.
CFPC is part of the China National Forest Products Company Ltd Group, a long-term participant in the NZ forestry sector. RMS Forest Growth NZ owns two forestry rights over approximately 25,600 ha. in the lower North Island. Approximately 5,235 ha. is planted as commercial forests, with limited ancillary rights over the remainder to establish, maintain or harvest the commercial forests.
CFPC is acquiring its interest in RMS Forest Growth to supplement the CNFPC Group’s NZ forestry operations. RMS Forest Growth will continue to own the forestry rights and the land will continue to be managed as sustainable production forests, with harvesting and re-planting in accordance with best NZ practices. The forests do not include any special land, farmland or residential land and will not be used for any residential purposes. There are no existing arrangements or log supply contracts.
Wood Week (1/4/20) reports that, as part of the ownership transition, the company has been renamed Remutaka Forests Ltd. The purchase includes 5,235 hectares of mixed age pine plantations on land leased from Greater Wellington Regional Council. It will be operated by CFGC Forest Managers, a forest products and management company with 30,000 ha. under management across the North Island, which supplies logs to domestic sawmills and is a major exporter.
CFPC Singapore is a subsidiary of (CFPC). Founded in July 1979, China National Forest Products Company Ltd is a State-owned enterprise directly under China’s Ministry of Forestry. In 1998, it was delinked from the State Forestry Administration and merged into China Forestry Group Co. Ltd. For 40 years it has traded in forest products and played a leading role in China’s national forestry industry.
Remutaka Forest’s company registration lists its Website as that of China Forestry Group NZ, which says the Group owns 24 forests across NZ, amounting to 22,000 ha. of plantation on approximately 29,000 ha. of land, supplying wood products to both the domestic and international market, and that its parent company also has operations in the US, Canada, Australia, Myanmar, India, Singapore, Russia, France, Uruguay, Brazil, South Africa and Mozambique.
Japanese Sumitomo Buys Maungataniwha Forest, Kaitaia
Summit Forests NZ Ltd (Sumitomo Corporation, Japan 100%) has consent to acquire approximately 729.6718 ha., being 163.7015 ha. at Baker and Fitzsimmons Forests (location unclear); and 565.9703 ha. at Maungataniwha Forest, Kaitaia, from Otangaroa Forest Ltd (Gary Stuart Leslie, NZ 100%). Price withheld under s.9(2)(b)(ii) of the Official Information Act.
The OIO states that Summit Forests NZ applied for consent under the special test for forestry activities in s. 16A (4) of the Act. Summit Forests is an NZ-based subsidiary of Sumitomo Corporation which owns and manages commercial forestry assets, primarily in Northland. This Land comprises parts of three existing commercial forests in Northland. Approximately 491 ha. will continue in crops of pinus radiata.
The planted area of Maungataniwha Forest will be reduced by 30 ha. to increase tracks, infrastructure and riparian strips. The remaining approximately 240 ha. will be in native bush (173 ha.) and tracks and infrastructure (20 ha.), unproductive land (20 ha.) and waterways and riparian strips (26 ha.). Summit Forests intends to continue to use the land as commercial forest, replanting after harvest.
For previous forest acquisitions by Summit, see July 2018, June and October 2017, August 2016, December 2015, September 2014, and November 2012. Sumitomo was No.13 on RNZ’s October 2019 list of top 50 private land owners in NZ. Sumitomo Corporation, listed on four Japanese exchanges, is one of the world’s top three sōgō shōsha companies (highly diversified, highly Japanese) with revenue of $US 32.16 billion (2013). It is part of the Sumitomo Group of 25 corporations of just about everything, and a history dating back to 1615.
Austrian Billionaire Buys A Third Property For Forestry
Wolfgang Leitner (Austria 100%) has consent to acquire 478.0605 ha. at 344 Aropaoanui Road, Tangoio, Napier, from Frances Mary Tucker, Stephen Peter Lunn and Glenview Settlement Trustee Co. Ltd (as Trustees of the Glenview Settlement Trust) (NZ 100%) for $5,250,000. The OIO states that Leitner applied for consent under the special test for forestry activities in s. 16A(4) of the Act.
The land is part of “Glenview” farm with 441.98 ha. currently grazed by sheep and beef stock. Leitner will plant approximately 386.4 ha. as a commercial forest. The remainder includes 15.2 ha. of existing native bush and unplantable land including boundary and riparian setbacks and ponds. He intends to harvest the existing trees and replant.
See September 2019 and January 2020 for Leitner’s previous consents and background; he’s number 1730 on the Forbes Rich List. A comparison of Austria’s gift/inheritance laws and NZ’s lack of inheritance, gift or capital gains tax may help explain Austrian counts’ and rich-listers’ sudden interest in non-resident forestry investments in NZ. This third purchase takes Leitner a bit beyond the lifestyle bolt-hole category, eh.
UK Family Wealth Buys A New Zealand Forest
Ellis Campbell (NZ) Ltd (UK 100%) has consent to acquire approximately 154.015 ha. at 6279 Wairau Valley Road, Marlborough, from Raglan Forestry Ltd (NZ 100%) for $750,000. The OIO states the applicant applied under the special test for forestry activities in s.16A(4) of the Act. Ellis Campbell (NZ) is a subsidiary of a family-owned company, which has previously invested in NZ and had forestry investments here for over 28 years. The land is already used for commercial forestry. Approximately 109.7 ha. is in pinus radiata and 5.1 hectares is unplantable. The applicant will replant the remaining 39.2 ha. of recently harvested bare land, and continue to use the land for forestry
The Ellis Campbell Group Website describes it as a fifth-generation private family investment office, founded in Manchester in 1877 and owning and managing property ever since. It has a historic portfolio of tenanted houses along with a mixed commercial investment portfolio, and has been involved in housebuilding and the private rental sector for over a century.
Prospa NZ Buys Its Loans Off Itself
Prospa NZ Ltd (Curfore Pty Ltd, Australia 32.3%; Australian Public 26.1%; Spinoza Investments Pty Ltd, Australia 15.3%; International Group of Companies Pty Ltd, Australia 6%; JP Morgan Nominees Australia Ltd, Australia 5.9%; Airtree Ventures Opportunity Fund Trusco Pty Ltd, Australia 5.9%; HSBC Custody Nominees (Australia) Ltd, Australia 5.7%; Israel Public 1.5%; US Public (0.8%); British Virgin Islands Public 0.5%) has consent to acquire business assets exceeding $100m, being a financing transaction part of a securitisation programme. The vendor is itself: Prospa NZ Ltd.
The OIO states that this consent is for financial transactions under an existing securitisation programme entered into in August 2019. Prospa is a lender to small and medium-sized businesses in NZ. Its direct parent company, Prospa Advance Pty Ltd, operates a similar business in Australia. The ultimate owner of both Prospa NZ and Prospa Advance Pty Ltd is Prospa Group Ltd, which is ASX-listed.
Prospa NZ expects the value of the financial assets that comprise the securitisation programme will, over time, exceed $100 million. The OIO is satisfied that the individuals who will control the investment have the relevant business experience and acumen and are of good character, and have demonstrated financial commitment to the investment.
Prospa NZ lends money to small businesses. Its Website says more than 24,000 small businesses have borrowed over $1.35 billion so far; it only takes a ten-minute application and a 24 hour wait to borrow $3,000. Prospa Group listed on the ASX just last June, raising A$109.6 million, most of which will go to “funding the equity portion of the company’s growing loan book and working capital, investment in new products and geographies and to repay corporate debt supply its equity for loans and working capital”.
“Securitisation” means you bundle up those small business loans, slice them into tranches and sell them on to someone else, getting your loan money back with a profit and shifting the risks of default off your own books (J. Lancaster, “Whoops”, 2010). You’ll remember this stuff from 2008, and won’t buy any, eh. The bit I don’t quite get is why Prospa NZ is buying its loans off itself (and requiring OIO consent), but no doubt these financial geniuses do.
Synlait Milk Buys The Dairyworks Business
Synlait Milk Ltd (China PR 39%; NZ 35%; Australia 17.4%; US 4.8%; Hong Kong 1%; various 2.7%) has consent to acquire 100% of the shares in Dairyworks Ltd from Margaret Elizabeth Cross, Peter David Cross and Bruce Robertson Irvine as Trustees of the GPS Trust (NZ 100%) for $112 million (subject to adjustment in accordance with the Share Sale Agreement).
The OIO states that Synlait Milk produces a variety of dairy products, including fresh milk, milk powders, and nutritional products. Dairyworks and its subsidiaries have developed a range of packaged dairy products including cheese, butter, and milk powder brands ( Dairyworks, Alpine and Rolling Meadow) as well as ice cream (Deep South).The acquisition will allow Synlait Milk to continue diversifying to service the retail and food service sectors of the domestic market. Synlait Milk 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 Synlait Milk has demonstrated financial commitment to the investment.
See last month, February 2020, for OIO consent and conditions for Synlait’s acquisition of Dairyworks’ land at Dunsandel, Canterbury, and also neighbouring land for water rights. And some background on both companies. This separate OIO consent is for Synlait’s acquisition of Dairyworks as a “significant business interest”.
Australian/Canadian Takeover Of Abano Healthcare (Lumino the Dentists)
Adams NZ Bidco Ltd, a NZ company owned by various overseas pension funds, institutional and other investors, and 2719970 Ontario Ltd (Canada 100%) have consent to acquire 100% of Abano Healthcare Group Ltd from existing shareholders (NZ Public 93.9%; various overseas 3.1%; Australian Public 3%), together with its lease of approximately 0.5 ha. for dental premises, for $149,808,756.
The OIO states that the joint applicants represent two investment groups (the Australian BGH Group and the Canadian OTPP Group) and that this is a targeted takeover of a NZ company. The joint applicants applied for consent for Adams NZ Bidco to acquire up to 100% of the fully paid ordinary shares in the NZ-incorporated Abano Healthcare Group, along with a related post-acquisition parental entity share restructure.
Abano Healthcare is listed on the NZX and owns one of the largest dental groups in Australia and NZ, operating through two brands Lumino The Dentists in NZ and Maven Dental Group in Australia. These employ over 2,300 people across more than 239 dental practices. The proposed acquisition was announced through the NZX in November 2019. It also requires approval from the High Court, the Australian Foreign Investment Review Board, and Abano Healthcare’s shareholders.
As at April 2019, Abano has 239 dental practices, 116 of them in Australia, making it the largest Australasian corporate dental group, although not largest by revenue as profits have fallen. In NZ however, profit margins increased consistently between 2011 and 2018. For more background on this deal, see Jenny Ruth, Newsroom, 4/4/19 and in NZ Herald, 20/7/19.
She suggests that the corporate takeover of dental practices relates in part to opportunities presented by the retirement of older, mainly male, dentists and a lower propensity for business ownership (debt?) among younger mainly female dentists. I’ve read somewhere about a similar pattern with NZ pharmacies. In buying an existing practice, you borrow to fund for your own future, but may also have to pay “good will” which funds your predecessor’s future in retirement.
Freightways Takeover Of Big Chill
Freightways Express Ltd (NZ Public 66.2%; Australian Public 17.7%; US Public 7.8%; Canadian Public 5.2%; Norwegian Public 2.1%; Hong Kong Public 0.5%; UK Public 0.2%; Singapore Public 0.2%; various overseas 0.1%) has consent to acquire 100% of the shares in Big Chill Distribution Ltd from existing shareholders, including a leasehold interest in 4.3977 ha. at 28 Pukekiwiriki Place, East Tamaki, for $117 million.
The OIO states that Freightways Ltd (the parent company) is NZX-listed with a high proportion of NZ ownership and predominantly NZ directors. It has operated a number of NZ businesses in the express package, business mail and information management sectors. Big Chill specialises in commercial transportation of chilled and refrigerated products. The acquisition is likely to lead through enhanced domestic services to the introduction of a NZ-first inter-island premium chilled and frozen overnight delivery service, using Freightways’ existing fleet of four 737-400 freighter aircraft.
Freightways will also introduce digital “track and trace” technology to the Big Chill fleet, allowing customers to be better informed about the location and delivery of freight. Freightways intends to optimise its line haul fleet through the addition of refrigerated trailer units to existing vehicles, with benefits including fuel savings, less traffic congestion and reduced carbon emissions.
NZ Herald (Paul McBeth, 30/10/19) reported that the $117m was an up-front payment representing 80% of Big Chill’s value, with a balance to be paid in 2022 based on earnings performance.See NZX announcement of 20/10/19 for details. Freightways has been around in various forms for 50 years. Its Website says its largest brand by revenue and operating earnings is NZ Couriers, and it has ten other courier brands, plus specialist delivery services and deliveries of services.
Big Chill’s Website says it began in 1996 shipping pies from Tauranga to Auckland. Clearly an essential service, as it now has over 200 temperature-controlled trucks and trailers, nine depots around NZ and temperature-controlled warehousing in Auckland and Christchurch. That’s a lot of pies in which Freightways now has its finger.
Rymans Buys Canadian-Owned Land For Christchurch Retirement Village
Ryman Healthcare Ltd (NZ Public 44.5%; US Public 13%; Geoffrey Alexander Cummings, NZ 10.2%; Kevin James Hickman, NZ 7.2%; Germany Public 6.6%; Australian Public 5%; various overseas 13.5%) has consent to acquire 12.94 ha. at 486 Main North Road, at the corner of Radcliffe Rd, Northwood, Christchurch, from PSPIB/CPPIB Waiheke Inc. (Canada Pension Plan Investment Board 50%; Canadian Government 50%). Price withheld under s.9(2)(b)(ii) of the Official Information Act.
The OIO states that NZX-listed Ryman Healthcare Ltd has operated retirement villages since 1984 and currently has 34 offering independent living, assisted living, rest home care, hospital care and dementia care. It seeks to construct a new comprehensive care retirement village with 318 units with a range of accommodation options. This is expected to create jobs and increase the aged-care units available in NZ. Part of the land will be vested with Christchurch City Council to assist in managing flood hazards to the retirement village.
This appears to not yet be one of Ryman’s 20 standing consents – see July 2019 – as the OIO is now identifying those more clearly. See June 2019 and February 2020 for two other recent Christchurch consents for Ryman, also not yet in the 20. See December 2017 for OIO consent for the Canadian government to buy half of the PSPIB pension fund that included ownership of this Christchurch land.
Scottish Private Equity Fund Buys Into Chorus House, Wyndham St
Partners Group Chorus Access, LP (US Public 34.4%; UK Public 25%; Singapore Public 15.1%; Denmark Public 6.1%; Switzerland Public 5.1%; various 14.4%) has consent to acquire a 60% limited partnership interest in Invesco Asia Real Estate Fund III, LP, which indirectly owns Chorus House, at 66 Wyndham Street, Auckland, from Invesco Investments (Bermuda) Ltd and IRE AFIII, Ltd (US Public 79%; various 21%).
The OIO states that Partners Group Chorus Access is a Scottish limited partnership and is an investment fund managed and advised by Partners Group. Invesco Real Estate Fund III, LP indirectly owns Chorus House, a commercial property at 66 Wyndham Street, Auckland. There will be no change in the day-to-day management of Chorus House. Partners Group Chorus Access has satisfied the OIO that the individuals who control the investment have the relevant business experience and acumen and are of good character, and Partners Group Chorus Access has demonstrated financial commitment.
Partners Group’s Website says it was founded in Switzerland in 1996 and is now a global private markets’ investment manager, serving around 900 institutional investors, with $US94 billion in assets under management. See April 2019 for Invesco’s background and its OIO consent to buy Chorus House and see also July 2018 and September 2018 for Invesco’s other properties in the Auckland CBD.
T&G Global Leases More Land For Apples At Waiohiki, Hawkes Bay…
T&G Global Ltd (German Public 74%; Chinese Public 20%; NZ Public 5.9%; various overseas 0.1%) has consent to acquire a leasehold interest in 69.59 ha. at 65 Waiohiki Road, Waiohiki, Hawkes Bay, from Brownrigg Agriculture Group Ltd (NZ Public 75.1%; Saudi Arabian Public 22.4%; Australian Public 2.5%) and Hill Country Holdings Ltd (NZ Public 100%). Price withheld under s.9(2)(b)(ii) of the Official Information Act.
…And Another Lease At Clivei
T&G Global Ltd (German Public 74%; Chinese Public 20%; NZ Public 5.9%; various overseas 0.1%) has consent to lease 34.63 ha. at 34 Farndon Road, Clive, from Brownrigg Agriculture Group Ltd (sub-lessor, NZ Public 75.1%; Saudi Arabian Public 22.4%; Australian Public 2.49%) and BL Land Co. Ltd (owner, NZ 100%). Price withheld under s.9(2)(b)(ii) of the Official Information Act.
In both consent summaries, the OIO states that these land blocks currently have apple orchards and some short-term seasonal crops. T&G Global intends to replant most of the land in high value Envy, Jazz, Lady in Red and Ju Gala apple varieties. The OIO is satisfied these redevelopments are likely to result in substantial and identifiable benefit to New Zealand through increased jobs, export receipts, capital expenditure, royalties paid and increased productivity and efficiency on the land. T&G Global has demonstrated benefit provided to New Zealand through previous investments.
A series of previous OIO consents for T&G Global have also involved leasing land for orchards rather than buying it. This form of low investment, low responsibility has also been taken up by Tegel for chicken farming and others. One of the questions raised in phase two of reviewing the Overseas Investment Act 2005 was whether OIO overview, consent and compliance should be required for foreign companies that merely lease land. Yes, absolutely, in my view. It’s about accountability for decisions about sensitive land in New Zealand that are being made or controlled by people or anonymous entities that are offshore. T&G is on its way to being a very large apple-grower in NZ.
Americans Turn Pine Forest Into Second Golf Links At Te Arai beach, Mangawhai
Te Arai Links (Richard and Suzanne Kayne Living Trust, USA 100%) has consent to lease 143.8 ha. at Te Arai South; and buy 25.2 ha. at Te Arai South from Te Arai South Holdings Ltd (Wyuna Trust, NZ 100%) for $3,490,000. The OIO states that Te Arai Links wants to acquire approximately 169 ha. in leasehold and freehold within Te Arai South Precinct.
It intends to develop two links-style 18-hole championship level golf courses, together with clubhouse and visitor accommodation and maintenance and water storage facilities. The land is currently a pine plantation forest used for production forestry. Te Arai Links’ ultimate owner developed the nearby Tara Iti golf course it says is ranked the second-best golf course outside the USA. Freehold title in certain parts of the land will be transferred to the Ngāti Manuhiri Settlement Trust, subject to Te Arai Links’ leases.
The stated benefits to NZ include the creation of 40 permanent fulltime jobs, an increase in exports of at least $6 million a year by the end of 2022, advancement of the Government’s Tourism Strategy, and at least $25 million for development purposes. Te Arai Links will undertake planting to protect indigenous fauna, and ecological management, including revegetation monitoring, ecological protection and pest and weed control.
Resource consents for Tara Iti required it to set up a Shorebirds Trust. The ultimate owner of both the Te Arai Links and Tara Iti companies is NZ Holdings III LLC, a company registered in Delaware (which UK expert Richard Murphy notes was the 1898 prototype for tax havens). The US directors of the two companies live in California.
Retrospective Consent Declined For Korean Guru’s Meditation Sites
Seung Heun Lee, Double Pine Investments Ltd and Meditation Tour Ltd (South Korea 100%) applied for OIO consent in regard to:
- Approximately 0.5109 ha. at 88 Reinga Road, Kerikeri, Northland;
- Approximately 24.7645 ha. at Whangaroa Road, Totara North, Kaeo, Northland;
- Approximately 0.6744 ha. at 8-10 Riverstone Lane, Kerikeri, Northland;
- Approximately 4.7978 ha. land at 85 Access Road, Kerikeri, Northland;
- Approximately 6.6613 ha. at 34 Macadamia Lane, Kerikeri, Northland;
- Approximately 156.2941 ha. land at 1112 Pungaere Road, Kerikeri, Northland;
- Approximately 1.7830 ha. at Old Wharf Road, Paihia, Northland.
from various undisclosed NZ vendors, for $10,382,420.
The OIO states that Mr Lee and the two companies he owns purchased several parcels of land near Kerikeri, Northland over the period 2014-2016 and sought retrospective OIO consent for those purchases. Mr Lee is the founder and proponent of Brain Education (formerly known as Dahn Hak Yoga) which promotes a mixture of exercise and meditation for a healthy lifestyle. The land in question is being used for meditation tourism. For consent to be granted, Ministers needed to be satisfied that the applicant meets the investor test and the test requiring substantial and identifiable benefit to New Zealand.
The investor test requires the applicant to have relevant business experience and acumen, have demonstrated financial commitment, be of good character, and not an individual referred to in s.15 or 16 of the Immigration Act 2009 (i.e. convicted or deported or persons likely to commit an offence). Both Minister Clark and Minister Sage were not satisfied that the investor test had been met and declined the application. Yeah, gobbling up seven properties scattered around Kerikeri does look like overkill for niche tourism like meditation – more like a land spec or laundry business.
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