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Foreign investment in Aotearoa/New Zealand

Overseas Investment Office - December 2014 Decisions

Europeans Buy Several Canterbury Dairy Farms

Another busy month at the OIO, dominated by dairy farm sales. In three separate Decisions, Southern Pastures Limited Partnership Sweden (58.4%), Luxembourg (22.2%), Germany (16.8%) and New Zealand (2.6%) received approval for the acquisition of a number of dairy farms. Firstly, a freehold interest in approximately 340 hectares of land located at Forks Rd, Mid Canterbury (Lochan Mor Farm). The vendor was Lochan Mor LP New Zealand (100%); consideration was withheld. The OIO states: "The Applicant intends to operate Lochan Mor Farm as part of its South Canterbury portfolio, and will increase performance through shared efficiencies, additional capital expenditure and sound farming practices".

In the second Decision, Southern Pastures received approval for the acquisition of:

• a freehold interest in approximately 177ha of land located at Terrace Road, Bankside, Selwyn, Canterbury (Longmead Farm); and
• a freehold interest in approximately 454ha of land located at Fyvie Road, Bankside, Selwyn, Canterbury (CPL & Redmond Farms); and
• a freehold interest in approximately 393ha of land located at North Rakaia Road and Burns Road, Bankside, Selwyn, Canterbury (Kenburn Farm).

Approval was also received for an overseas investment in sensitive land, being the Applicant's acquisition of rights or interests in 50% of the shares of Darrochs Grazing Limited which owns or controls a leasehold interest in approximately 406ha of land located at Darrochs Road, Bankside, Selwyn, Canterbury (Riverfields Farm). The vendors were Longmead Farm Limited New Zealand (100%), Canterbury Pastoral Limited, New Zealand (100%), Kenburn Farm Limited New Zealand (100%) and Existing shareholders of Darrochs Grazing Limited New Zealand (100%); consideration was also withheld. The OIO states: "The Applicant intends to operate the properties as part of its South Canterbury portfolio, and will increase performance by creating an additional dairy farm (to be converted from existing dairy support land), increasing cow numbers, improving irrigation infrastructures, installing in-shed feeding systems, increasing pasture renewal and building additional housing".

In the third Decision, Southern Pastures received approval for the acquisition of a freehold interest in approximately 531ha of land located at Rakaia Terrace Road, Mid Canterbury (Mead Farm); and a freehold interest in approximately 0.4ha of land located at Rakaia Terrace Road, Mid Canterbury (Council Land). The vendors were Mead Pastoral Limited Partnership Germany (68.6%), Luxembourg (6.6%), New Zealand (24.8%) and Selwyn District Council New Zealand (100%); consideration, you guessed it, withheld under section 9(2)(b)(ii) of the Official Information Act. Southern Pastures already own a number of central North Island dairy farms having bought eight from Graeme Hart in December 2012 at around half the going per hectare rate for the area. See our commentary for that month as well as July 2014 for details of these purchases.

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Canadians Buy Another

In another significant Canterbury dairy farm sale, Cumberland Dairy Farm Limited Canadian Government (100%) received approval for an acquisition of a freehold interest in approximately 964.4 hectares of land at 154 Klondyke Road, Montalto, Canterbury. The vendor was Klondyke Dairy's Limited New Zealand (100%); consideration was again withheld under section 9(2)(b)(ii) of the Official Information Act. The OIO states: "The Applicant is ultimately, indirectly, owned by the Public Sector Pension Investment Board. The land is currently being used as a dairy farm. The Applicant intends to develop the farming operation on the land".

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Ditto

Freshmax NZ Limited New Zealand Public (59%) and Australian Public (41%) received approval for the acquisition of rights or interests in 76% of the shares in Agrilasia Farms Limited Joint Venture, which will own or control:

• a leasehold interest in approximately 215 hectares of land at various addresses in the Hawkes Bay; and
• a freehold interest in approximately 171 hectares of land at various addresses in the Hawkes Bay. The vendor was The Crasborn Group New Zealand (100%); consideration was withheld under section 9(2)(b)(ii) of the Official Information Act.

The OIO states: "The Applicant is one of New Zealand's major distributors, marketers and exporters of premium fresh produce and a joint venture and business partner of the Crasborn Group. To assist its strategy of ensuring the supply of specific apple varieties to the global market, the Applicant seeks to acquire the securities and intends to further develop the sensitive land". See our May 2011 commentary for details of Freshmax's original entry on the Agrilasia Farms share register.

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Thais Plan Papamoa Residential Subdivision

TCC Assets Limited, International Beverage Holdings Limited and Interbev Investment Limited Charoen Sirivadhanabhakdi, Thailand (40.26%), Khunying Wanna Sirivadhanabhakdi, Thailand (40.26%) and various overseas persons (19.48%) received retrospective approval for the acquisition of ordinary shares in Fraser and Neave Limited ("F&N shares") and ordinary shares in Frasers Centrepoint Limited ("FCL shares"), as follows:

• the acquisition of approximately 90% of the F&N shares prior to March 2013 (retrospective consent required); and
• the acquisition of up to 100% of the FCL shares by one or more of the entities comprising the Applicant.

Until January 2014, Fraser and Neave Limited ("F&N"), through its Singapore-based property arm Frasers Centrepoint Limited ("FCL") and its New Zealand subsidiary Frasers Papamoa Limited ("FPL") owned sensitive land. F&N no longer holds an interest in sensitive land following a demerger in January 2014, but FCL and FPL continue to hold an interest in that sensitive land. The sensitive land comprises:

• a freehold interest in approximately 0.5 hectares of land at 530 Gloucester Road, Papamoa;
• a freehold interest in approximately 0.5 hectares of land at 536 Gloucester Road, Papamoa;
• a freehold interest in approximately 0.5 hectares of land at 538 Gloucester Road, Papamoa;
• a freehold interest in approximately 7.6 hectares of land at 520 Gloucester Road, Papamoa;
• a freehold interest in approximately 0.6 hectares of land at 540 Gloucester Road, Papamoa;
• a freehold interest in approximately 2.7 hectares of land at 1 Papamoa Beach Road, Papamoa.

The vendors were Existing shareholders of Fraser and Neave Limited and Frasers Centrepoint Limited Various (100%); asset value was $66,295,980. The OIO states: "The Applicant has sought consent to both retrospective and prospective transactions. The sensitive land at Papamoa Beach will eventually be developed into a residential housing subdivision". See our August 2003 commentary for details of Fraser Neave's original purchase of this land.

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Chinese Buy Two Manukau Harbour Islands

In another sensitive land decision, Rainbow Holdings NZ Limited Wanying He, China, People's Republic of (100%) received approval for the acquisition of rights or interests in an additional 81% of the shares of Lee Island Investments (NZ) Limited (giving the Applicant a total of 90%) which will own or control a freehold interest in approximately 27ha of land located at 147-149 Pararekau Road, Karaka, Auckland (Pararekau & Kopuahingahinga [Lee] Islands). Approval was also received for an overseas investment in significant business assets, being the establishment by the relevant overseas person of a business in NZ which will be carried on for more than 90 days in any year and the total expenditure to be incurred, before commencing the business, in establishing that business will exceed $100 million.

The vendors were Karaka Harbourside Estate Limited New Zealand (100%) and Simon Deng-Li (also known as Yin Bing Deng-Li) New Zealand (100%); consideration was $18,600,000 for the freehold land and $22,950,000 for the shares in Lee Island Investments (NZ) Limited. The total development was valued at $130,600,000. The OIO states: "Lee Island Investments (NZ) Limited intends to construct a six-star luxury resort on the land, which will include suites, restaurants, entertainment and business facilities on Pararekau Island. Kopuahingahinga Island will become a native reserve".

In May 2013 Rainbow Holdings received OIO approval for the purchase of 39 hectares near Taupo on which they plan to build a geothermal power station. Stuff.co.nz briefly reports on the deal (30/1/14): "Two islands in Auckland have been bought by Chinese interests in a $41.5 million deal for a luxury tourist resort. The Overseas Investment Office has approved the sale of Pararekau Island and Kopuahingahinga or Lee Island near Papakura in the Manukau Harbour for $18.6m to Rainbow Holdings NZ. Both of these islands are connected to the mainland by a road.

"As part of the transaction, Rainbow was also permitted to buy an 81% stake in Lee Island Investments for $22.95m, giving it 90% control of the company. Rainbow Holdings NZ is owned by Chinese resident Wanying He, who told the OIO there were plans for a six-star $130m luxury resort, including restaurants, entertainment and business facilities. Kopuahingahinga Island would become a native reserve. The vendor of the land was Karaka Harbourside Estate, which is connected to developers Ian and James Ross. According to past media reports, the Ross' bought Pararekau Island 12 years ago. In 2012 they applied for Environment Court permission to build a gated community on the island, arguing that it was no longer economically viable to graze stock there. The owner of the shares is Simon Deng-Li, also known as Yin Bing Deng-Li".

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Other December Decisions

Isaac Asphalt Limited Downer EDI Limited, Australia (50%), Robert Geoffrey McGregor Clarke, William James Luff and Alister Gordon McDonald as Trustees of the Isaac Conservation and Wildlife Trust, New Zealand (49.7%) and Robert Geoffrey McGregor Clarke as trustee of the Estate of Diana, Lady Isaac, New Zealand (0.3%) received approval for the acquisition of a leasehold interest in 1.9 hectares of land at 550 McLeans Island Road, Christchurch.

The vendor was Robert Geoffrey McGregor Clarke, William James Luff and Alister Gordon McDonald as Trustees of The Isaac Conservation and Wildlife Trust New Zealand (100%); lease payments are $85,754 plus GST per annum, subject to review. The OIO states: "The applicant is a joint venture between Downer New Zealand Limited and The Isaac Construction Co. Limited, which was formed to own and operate an asphalt processing plant which is situated on 1.8847 hectares of land at McLeans Island Road. The formation of the joint venture will allow Downer and Isaac to continue their existing upper South Island asphalt operations in a cost effective manner".

Fletcher Residential Limited Australian Public (34.3%), New Zealand Public (31.5%) North American Public (18.3%) and various overseas persons (15.9%) received approval for the acquisition of a freehold interest in approximately 3.7 hectares of land at 172A Don Buck Road, Massey, Auckland. The vendors were Birdwood Residential Estates Limited New Zealand (100%); consideration was again withheld. The OIO states: "The vendor intends to subdivide the land into approximately 76 residential lots. The Applicant intends to acquire the lots from the vendor and create residential housing on the lots". See our February 2013 and September 2014 commentaries for details of Fletcher Residential's last significant land purchases in Auckland.

Cloudy Bay Vineyards Limited Moet Hennessy Louis Vuitton, France (66%) and Diageo Plc, United Kingdom (34%) received approval for the acquisition of a freehold interest in approximately 46.1544 hectares of land at 45 Northburn Station Road, Cromwell. The vendor was Northburn Wine Company Limited New Zealand (100%); consideration was also withheld. The OIO states: "The Applicant is an owner and operator of vineyards in the Marlborough region. The Applicant is acquiring the land to secure a further supply of grapes, in order to increase its production and sales of high end pinot noir from the Central Otago region". See our previous commentaries for July 2002, July 2004, April 2007, March 2008 and April 2014 for details of other vineyard purchases by Cloudy Bay.

GMO Farm Land Optimization Fund, LP United States Public (66.3%), Swiss Public (13.3%), United Kingdom Public (12.1%) and various overseas persons (8.3%) received approval for the acquisition of a freehold interest in approximately 268 hectares of land located at 166 Guernsey Road, Waihopai Valley, Marlborough (Waihopai River Vineyard). The vendor was Marisco Properties Limited New Zealand (100%); consideration was withheld yet again. The OIO states: "The overseas investment is a financing transaction to enable the Vendor to secure funding to grow its winemaking business. The Applicant will lease the sensitive land back to the Vendor who will have the right to repurchase the land upon expiry of the lease after 5 or 12 years". See our July 2014 commentary for details of this investor's purchase of a Hurunui dairy farm.

And, finally for December, Pan Pac Forest Products Limited Oji Holdings Corporation, Japan (100%) received approval for the acquisition of a freehold interest in approximately 733.6 hectares of land at 122 Waipatiki Road, Hastings, Hawkes Bay. The vendor was Garry Samuel Collins, Thomas Peter Clark and Stephen Peter Lunn as trustees of the GS Collins Family Trust New Zealand (100%); consideration was $3,120,000. The OIO states: "Pan Pac Forest Products Limited ('Pan Pac') owns forests, a sawmill and pulp plant in Hawkes Bay. Pan Pac intends to convert the land to forestry in order to secure supply of wood for its nearby sawmill and pulp plant". See our commentaries for July and August 2001, November 2004, August 2005, January 2006 and November 2014 for details of other land purchases here by Pan Pac.

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