Foreign investment in Aotearoa/New Zealand
Overseas Investment Office – June 2020 Decisions
Augusta/Centuria Private Equity To Develop Queenstown Council Land
NFF QT Development Pty Ltd as trustee for NFF QT Development Unit Trust, Augusta Lakeview Holdings Ltd and other applicants Australia 79.9%, NZ 18.6%, various 1.6%) has consent to lease 0.5487 ha., and buy 2.5457 ha. of land in the Lakeview Precinct, Queenstown, from Queenstown Lakes District Council (NZ 100%), for $75 million.
The applicants are NFF QT Development Pty Ltd (part of the Australia property development group NFF), Augusta Lakeview Holdings Ltd (subsidiary of NZX-listed Augusta Capital Ltd) and NFF and Augusta Capital Ltd related entities. NFF QT and Augusta Lakeview Holdings will acquire and develop 3.09 ha. into a primarily residential mixed-use precinct over several stages between 2023 and 2040. The stated benefits are new jobs, Increased exports, additional investment for development, advancement of Government policy for urban growth, and consequential benefits for the Queenstown region.
In April 2020 Augusta got OIO consent for a new share issue to fund this Queenstown development, and other industrial development. Centuria NZ took 23.3%. By June Augusta Capital was in the process of a takeover bid by Australian fund manager Centuria Capital – a Covid-19 bargain, see May 2020 commentary – which went unconditional in early August.
The Australian-registered development company and unit trust as part of the applicant for this consent suggest that largely Australian investment capital has already been lined up. Centuria Capital specialises in setting up investment funds in property. A search for NFF finds a series of registered companies but no ultimate owner, or other information about property development.
Sun Life Takes Over InfraRed, Including Share Of Transmission Gully PPP
Sun Life Financial Inc. (Canada Public 75.6%; US Public 14.4%; various overseas 10.1%) has consent to acquire 100% of the partnership interests in InfraRed Partners LLP (more than $100m), which through its partly-owned subsidiary leases approximately 270 ha. at the Transmission Gully project site north of Wellington. The vendor is InfraRed Capital Partners (Management) LLP (UK Public 98.6%; US Public 0.7%; South Korean Public 0.7%). The closing payment is $300 million, with a small percentage attributable to Transmission Gully project.
The OIO states that, through its subsidiaries, InfraRed owns 40% of the interests in Wellington Gateway Partnership No. 2 LP which is undertaking the Transmission Gully project through its general partner Wellington Gateway General Partner No. 2 Ltd. The project is underway and Sun Life will not have any material influence over its operation. The investment will provide substantial and identifiable benefit to NZ through advancing the Government’s public-private partnership (PPP) model and encouraging investment in capital infrastructure in NZ.
On 1 July 2020 Sun Life Financial announced completion of its majority stake acquisition of London-based InfraRed Capital Partners, a global infrastructure and real estate manager, with approximately $US12 billion ($C17 billion) of client assets under management. Sun Life’s Website describes it as an “international financial services organisation providing insurance, wealth and asset management solutions to individual and corporate clients”. It operates in Canada, USA, UK, Ireland, Hong Kong, Philippines, Japan, Indonesia, India, China, Australia, Singapore, Vietnam, Malaysia and Bermuda, and as of March 2020 had $US1,023 billion worth of assets under management.
Hard to see how an acquisition that won’t materially influence operations will be of benefit in sorting out “Transmission Gully’s PPP Mess” (Newsroom, 3/6/20). Delays, a legal standoff between the partners and NZ Transport Agency (NZTA), road surface redesign and escalating costs mean this expressway may not be completed for another year, possibly two, despite just being given another $14 million advance pay-out.
(Then) Transport Minister Twyford blamed it all on the PPP contract signed by the National government, and asked Infrastructure Commission to review the project (NZ Herald 21/8/20). See also the Spinoff (7/5/20) on Transmission Gully and PPPs in general. It mentions that the Government is considering whether the Auckland Light Rail project should be a PPP involving Infra, Canadian pension fund CDPQ and the NZ Superfund, or directly funded and built by NZTA. However, a decision on this was knocked off the table by NZ First and the election.
JP Morgan Private Equity In Industrial Property Partnership With Stride
AP SG 17 Pte Ltd. , (North America 31%; Asia 29.5%, Europe and UK 29.5%, various 10%) and Stride Industrial Property Ltd (NZ 69.7%, Australia 24.3%, USA 3.2%, Japan 1.8%, Hong Kong 0.6%, UK 0.2%, various 0.2%, Czech Republic 0.1%) has consent to acquire significant business assets, and approximately 15.9 ha. at five separate locations in Auckland. The vendor is Stride Property Ltd , and the price is $256.93 million.
The OIO states that AP SG 17 Pte Ltd. is a special purpose company for the NZ investments of an international institutional investors, and advised by JP Morgan Asset Management. Stride Industrial Property Ltd is part of the NZ commercial property investor Stride Property Group, incorporated to participate in the joint venture to acquire, develop, lease, and manage a portfolio of industrial properties in NZ.
The stated benefits to NZ include NZ participation in the investment (NZ directors and at least 69% NZ ownership by Stride Property Group); added market competition; greater efficiency or productivity and enhanced domestic services (relating to increase in size, specification and availability of industrial premises); previous investments that benefitted NZ); additional investment in development, and creating a new accounting services job and retaining an investment management job). The OIO has taken possible delays due to Covid-19 into account in formulating special conditions of consent to the investment. If there are special conditions on this consent, why aren’t they made public?.
Stride Property Group (SPG)’s Website describes it as an NZX listed stapled group that invests in New Zealand office, retail and industrial property. It comprises Stride Property Ltd (Stride) and Stride Investment Management Ltd (SIML) which currently manages the property portfolios of Stride, Diversified NZ Property Trust (DNZ) and its predecessor fund Diversified NZ Property Fund Ltd and Investore Property Ltd, which is described as an NZX listed property company specialising in large format retail assets. Stride Property Group was formed in July 2016 following the strategic demerger of SIML and Investore from Stride. So, overseas money buying NZ property via NZ listed companies.
Unlike residential property, there is no restriction on overseas ownership of commercial property. Our lack of capital gain tax contributes to this sector featuring among companies with the lowest tax paid as a proportion of revenue. In 2017 Stride Properties’ effective tax rate was just 12.7% (Bill Rosenberg presentation to E tū, 5/9/18, slide 16). See April 2018 and April 2020 for other OIO consents involving Stride, formerly known as DNZ Property Fund Ltd.
Worldline Takeover Of Ingenico In EU Includes NZ Payment Systems
Worldline SA (France 31.5%; Switzerland 27.9%; USA 17.2%; UK 7.1%; Germany 3.6%; various 12.8%) has OIO consent as part of an acquisition happening overseas for 100% of the shares in Ingenico Group SA and the convertible bonds of Ingenico OCEANEs. From the shareholders of Ingenico Group SA (French Public 31.5%; Swiss Public 27.9%; North American Public 17.2%; various 12.8%; UK Public 7.1%; German Public 3.6%). Price of the whole deal is approximately $NZ13,500 million, which includes NZ assets Paymark Ltd and Bambora NZ Ltd.
The OIO states that Worldline is one of the largest European entities in the payment and transactional services industry, offering pan-European and domestic payment solutions for physical or online businesses, secure payment transaction processing for banks and financial institutions, and transactional services in e-ticketing. 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 there is financial commitment to the investment.
Reuters (8/9/20) reports that Ingenico’s strong presence in the travel, health and retail sectors is one of its main attractions for Worldline, while the combined company would have also have an extended partnership with German savings banks. This acquisition by Worldline, which was born out of French information technology (IT) company Atos, is emblematic of a wave of mergers and acquisitions that US rivals kicked off in 2019 as they try to build up their share of digital transactions.
However, this $US9.23 billion deal may need changes to meet European Union anti-trust regulatory approval. Paymark was the payment system – “card-present electronic transaction infrastructure and services” – of NZ’s four main (Australian-owned) banks, who hived it off and sold it to Ingenico with OIO and Commerce Commission consent – see commentary of October 2018.
Corisol Buys Land For Third Forestry Conversion
Corisol NZ Ltd (Switzerland 100%) has consent to acquire 316 ha. at 250 Sutherland Rd, Manuka Creek, Lawrence, from Micheal John Nicholl, Bernard James Nicholl and Anthony John Perkins as trustees of the MJ Nicholl Farm Trust Trust (NZ 100%) for $1.775 million. The OIO states that Corisol applied under the special test for forestry activities in s.16A(4) of the Overseas Investment Act. It is a subsidiary of a family-owned Swiss company. It has previously invested in NZ, with forestry investments here since 2011.
Corisol plans to develop the land into a commercial forest, planting approximately 290 ha. in tree crops by winter 2022. The remaining 26 ha. will be native bush (including scrub), roading, tracks and buffer land, or otherwise unplantable. Corisol intends to replant after harvest as part of normal commercial forestry operations. The investment aligns with Corisol’s broader plans to create an appropriately scaled forestry business.
Corisol is a Swiss investment company. This is its third forestry conversion in NZ; see October and November 2019. In October 2019 Corisol was already No.15 of Radio NZ’s list of top 50 landowners, with 18,231 hectares (Stuff, 17/10/19). It began in 2011 with forestry land purchased from Ngāi Tahu. See October 2019 commentary for more detail about the company.
Fishing Quota For West Coast Partnership
The Minister of Fisheries and the Minister of Finance have given consent under the Fisheries Act 1996 for Westfleet Seafoods Ltd (Endurance Fishing Co. Ltd, NZ 50%; Nippon Suisan Kaisha Ltd, Japan 25%, Te Ohu Kaimoana, NZ 25%) to acquire fishing quota and annual catch entitlement. The OIO states that Westfleet is a vertically integrated fishing and processing company. It employs 108 people and owns and operates five fishing vessels, and a fresh fish processing factory in Greymouth.
It seeks to acquire quota and annual catch entitlement from as yet unidentified vendors, price unknown. Westfleet offers (in respect of its Westland fisheries) economies of scale and a degree of specialisation (surface long line vessels) that others in the regional industry would not be able to match. The consent permits Westfleet to acquire quota within the next five years and to acquire annual catch entitlement from third parties for the next 30 years. This is likely to result in 19 additional jobs, increased export receipts, and greater efficiencies in catch and processing.
Westfleet’s success is likely to contribute towards financial success of iwi with ownership interests in Sealord and further the Government’s policy of promoting economic development in Westland. It is likely to ensure the ongoing viability of Westfleet’s existing investments in plant and fishing vessels and allow for expansion of the factory to include a cold-store. While Westfleet’s plans have been somewhat impacted by Covid-19, as an essential industry it continued to operate during the lockdown. Westfleet is confident that, as its export markets recover from the downturn, it will be well positioned to deliver benefits for New Zealand.
Endurance Fishing Co (established 1989) is a Nelson-based company. Nippon Suisan Kaisha (Nissui) is a Japanese commercial fishing and marine product procurement with annual revenues of $US5.1 billion in 2014. Te Ohu Kaimoana (Māori Fisheries Trust) is a representative organisation that works to protect Iwi and Māori customary and commercial interests in fisheries and the marine environment, giving effect to the principles of Te Tiriti o Waitangi and Māori rights contained within it. It was created out of the 1992 Māori Fisheries Settlement. It is successor to the Māori Fisheries Commission (1989-92) and the Treaty of Waitangi Fisheries Commission (1992-2004).
Kinetic/Skybus To Make Go Bus E-Buses
Kinetic NZ Holdings Ltd (OPSEU Pension Plan Trust Fund, Canada 95%; Management and directors of Kinetic Co. Pty Ltd, Australia 5%) has consent to acquire 100% of Go Bus Holdings Ltd, which leases 0.4349 ha. at 164 Foundry Road, Silverdale, Auckland, and 0.7133 ha. at 352 East Tamaki Road, East Tamaki, Auckland. The vendor is Go Bus Ltd (Ngāi Tahu Holdings Corp., NZ 66.7%; Te Whakakitenga o Waikato Inc., NZ 33.3%). Price withheld.
The OIO states that Kinetic NZ Holdings and its parent company Kinetic TCo Pty Ltd provide transit services in NZ and Australia, through operation of SkyBus in Auckland, Melbourne, Hobart and the Gold Coast, as well as other bus and coach services throughout Australia. Kinetic intends to invest in the Go Bus business with a view to submitting high-quality bids for various NZ transport contracts as they come up for renewal. It will review the Go Bus fleet with the aim of introducing more e-buses, which will support NZ’s environmental obligations under international agreements as well as under the Climate Change Response (Zero Carbon) Amendment Act 2019.
This deal was completed in August, and immediately written up in Wikipedia, including Go Bus’s ownership history. Kinetic is a Melbourne-based public transport company, known as AATS Group prior to August 2019. It is majority owned by one of Canada’s largest pension funds, OPTrust. See Wikipedia for Kenetic’s history and 13 subsidiary bus companies in Australia and NZ.
Go Bus was NZ’s largest bus operator, with key Government contracts to operate urban services in Auckland, Hamilton and Christchurch, and is the largest provider of school bus services, as well as owning Johnston’s Coaches. Kinetic’s Website says its new fleet of electric buses for Auckland Transport will connect growth suburbs with Auckland Airport. In Greater Christchurch, it will operate a further 25 new electric buses for Environment Canterbury (ECan).
Mainland/Navis Capital Buys Another Poultry Farm
Mainland Poultry Ltd (NZ 29%; USA 21.2%; UK 10.4%; Channel Islands 6%; Cayman Islands 5.6%; Finland 3.7%; Luxembourg 3.1%; British Virgin Islands 3.1%; Germany 3%; Thailand 2.7%; Malaysia 2.5%; Kuwait 2.3%; Ireland 2.1%; Canada 1.3%; Japan 1.2%; various 3%) has consent to acquire approximately 218 ha. at 116-118 Huirimu Road, Te Awamutu and approximately 15.1 ha. at 232 Huirimu Road, Te Awamutu, from Narrandera Farms Ltd (NZ 100%) and Anne Marie McKenzie, Kim Donald McKenzie, Redoubt Trustees XIII Ltd as trustees of the K&A McKenzie Family Trust (NZ 100%) for $9 million.
The OIO states that Mainland Poultry is an NZ-based agri-business that is a vertically integrated producer of eggs, egg products, and animal feeds. It is indirectly majority-owned by an overseas-based investment fund, with the remaining ownership held by its NZ founders. It intends to develop a free-range egg farm expected to produce a substantial number of eggs once in full production.
The stated benefits to New Zealand include new jobs in construction and ongoing operation; additional investment in development; NZ participation in the investment; protection of indigenous vegetation; advancement of NZ economic interests with increased egg production; increased processing of egg products; and greater efficiency of the business and productivity from the land. The OIO has taken possible delays due to COVID-19 into account in formulating special conditions of consent to the investment.
In late 2017 Navis Capital bought 75% of Dunedin-based Mainland Poultry, NZ’s biggest egg producer, for about $300m, at that time using Hong Kong capital, reported NBR (2/11/17). See OIO consent and our commentary of September 2017.
In September 2019, a poultry virus on Mainland”s “colony-system” farms in Otago caused Biosecurity NZ to halt all chicken product exports from NZ, although there was said to be no risk to human health (Newstalk, 3/9/19).
Navis Capital Partners (established 1998) is an investment company operating in Southeast Asia, and Hong Kong, which has managed more than 80 private equity funds and 45 follow-on investments, as well as listed-company and Shariah-compliant investment funds. Shariah requires that Islamic investors share risks as well as profits, rather than lending money at interest.
Singaporean Buys Otago Vineyard
Goh Yew Lin, Magrathea Pte. Ltd, Magrathea Wine Company Ltd (Singapore 90%; NZ 10%) has consent to acquire 8.5640 ha. at Quest Farms Vineyard, 1037 SH6, Cromwell, from Mark II Ltd , Mark Jeremy Mason (NZ 100%) for $1.650 million. The OIO states that Mr Goh Yew Lin is a Singaporean who intends to create a new category of NZ fine wines. He has partnered with two NZ winemaker-growers who will produce pinot noir wine which will be grown, processed and cellared at a winemaking and storage facility on the land, and introduced to the market at a premium price.
He intends to export most of the wine to various countries. The stated likely benefits to NZ are the creation of 1.5 full-time jobs; introduction of approximately $1.8 million to construct the winemaking and storage facility. There will be increased processing of grapes (a primary product) as the applicant intends to replant areas at a higher density. Pinot grapes are already being grown, hand-pressed and small batch fermented into wines by the farm’s two current operators.
Goh Yew Lin has a high profile in the Southeast Asian securities industry. In 2017 he was Managing Director of Singapore-listed investment company GK Goh Holdings and Director of Singapore investment company Temasek Holdings, as well as Deputy Chair of the National Arts Council and Chair of the Yong Siew Toh Conservatory of Music and the Singapore Symphony Group. In October 2019 he was appointed Chair of Duke-NUS Medical School Governing Board. Magrathea, a planet in the Horsehead Nebula, specialises in custom-made luxury planet building, including a planet-sized computer called Earth (see “Hitchhiker’s Guide To The Galaxy”).
Campaign Against Foreign Control of Aotearoa,
P.O. Box 2258
Christchurch.