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Foreign investment in Aotearoa/New Zealand
Overseas Investment Office - January 2015 Decisions
Singaporeans Buy Half Share Of Two Auckland Office Towers
A quiet month at the OIO to start the New Year. In three related decisions, the Singapore government has taken a half share in the Air New Zealand Building and Fonterra Building in Auckland. Firstly, Reco Aotearoa Private Limited, Singapore Government (100%), received approval for the acquisition of rights or interests in at least 49% and up to 100% of the issued share capital of Viaduct Corporate Centre Limited, the value of the assets of Viaduct Corporate Centre Limited and its 25% or more subsidiaries being greater than $100m. The vendor was McDonald (Kevin Patrick), Rathbun (Gregory Noel) as trustees of the Eamon Trust and Fraser (Andrew McKenzie), Fraser (Allan McKenzie) and Rathbun (Gregory Noel) as trustees of the Balfour Trust, New Zealand (100%); asset value was stated as $157,600,000.
In the second decision Goodman Nominee (NZ) Limited, New Zealand Public (78.7%), Australian Public (19.3%), and various overseas persons (2%), received approval for the acquisition of rights or interests in a further 1% and up to 100% of the issued share capital of Viaduct Corporate Centre Limited, the value of the assets of Viaduct Corporate Centre Limited and its 25% or more subsidiaries being greater than $100m. Same vendor and asset value for both approvals. Also, similar commentaries from the OIO. "The Applicant will acquire an interest in Viaduct Corporate Centre Limited as part of a joint venture arrangement being entered into with Goodman Nominee (NZ) Limited (and vice versa. The joint venture is being formed to hold investments in commercial property.
In the third decision, Viaduct Corporate Centre Limited, Singapore Government (49%), New Zealand Public (36.9%), Australian Public (11.6%), North American Public (1.9%), Asian Public (0.3%), United Kingdom Public (0.2%) and the European Public (0.04%), received approval for the acquisition of property in New Zealand used in carrying on business in New Zealand for consideration exceeding $100m, that property being the Air New Zealand Building and Fonterra Building at Fanshawe Street, Auckland.
The vendor was Goodman Nominee (NZ) Limited, New Zealand Public (72.5%), Australian Public (22.8%), North American Public (3.7%), Asian Public (0.6%), United Kingdom Public (0.3%) and the European Public (0.07%); asset value was $157,200,000. The OIO states: "The Applicant is acquiring the Air New Zealand Building and Fonterra Building in Auckland to add to its commercial property portfolio". Interestingly, the asset value drops by $400,000 for the last transaction, so perhaps someone has "clipped the ticket"? Also, the shareholder profile for Goodman Nominees Limited changes despite all of these transactions presumably happening on the same day?
The deal appears to part of a wider development planned for the area, as reported by Anne Gibson in the New Zealand Herald (4/11/14). "Singapore's sovereign wealth fund has made its first New Zealand real estate investment, buying a half stake in some of Auckland's newest commercial buildings in the Viaduct Quarter. Goodman Property Trust, the country's largest listed property investor by market capitalisation, will retain a 51% stake in the portfolio valued at $313 million, and Singapore's GIC will own the rest. The partnership expects the portfolio grow to $500 million over time. GIC is a global investment firm with over $US100 billion assets under management.
"Goodman has been looking for a joint venture partner to build its Viaduct Corporate Centre, on Auckland's waterfront, having bought the Air New Zealand building and a 50% interest in the corporate centre in 2006. The development grew when Goodman bought the new Fonterra building, which it is developing with Fletcher Building. 'The introduction of a like-minded partner gives Goodman the capacity to expand its investment in the Viaduct Quarter, enhancing the overall portfolio without the requirement for any significant new funding', said Goodman Chief Executive, John Dakin. The deal is pending approval from the Overseas Investment Office and certain approvals from the free hold land owner of the Air NZ and Fonterra buildings..."
Back to TopJapanese Buy Morton Estate Wines
Lion - Beer, Spirits & Wine (NZ) Limited, Japanese Public (78.5%), United States Public (9.4%), various overseas persons (5.8%), United Kingdom Public (5.2%) and Australian Public (1%) received approval for the acquisition of a freehold interest in approximately 41.2 hectares of land at Rapaura Road, Marlborough ("the Land"). The vendor was Ascross Investments Limited. The Wine Portfolio Limited (previously known as Morton Estate Wines Limited) Canada (100%); consideration was $6,775,000.
The OIO states: "The Applicant is New Zealand's largest brewer and a major producer of wine in New Zealand. The Applicant intends to purchase the Land and 'Morton Estate' brand to add to its portfolio of premium New Zealand wine brands". See our April 1998 commentary for details of the Japanese purchase of Lion. Lion has been an active purchaser of New Zealand vineyards since this time. Catherine Harris at www.stuff.co.nz reports briefly on this deal (2/3/ 15).
"The vineyard associated with well-known wine label Morton Estate has been snapped up by Lion Beer, Spirits and Wines' New Zealand arm. The deal has been given approval by the Overseas Investment Office to buy 41.25ha of land on Rapaura Rd in Marlborough for $6.775 million. Reasons given for the permission included increased exports. The vendor was Katikati-based company The Wine Portfolio, owned by Canadian John Coney. Its marketing manager, Fiona MacDiarmid, said the Morton Estate brand had been sold to Lion last year but permission was needed to sell its Stone Creek vineyard as well.
"'We've still got another vineyard in Marlborough', she said, and five more in Hawke's Bay. Morton Estate was started in 1978 by kiwifruit grower Morton Brown. The label won early success and was bought by Coney in 1995 who then added a number of other wine labels including Mill Road and Nikau Point. MacDiarmid said it sold Morton Estate to raise funds but was not looking at selling any other labels. 'We needed to raise funds to reinvest into the winery and the vineyards to take us to that next level, and Lion approached us with this offer and we accepted'".
Back to TopOther January Decisions
Vulpes Agricultural Land Investment Company Pte Ltd. Stephen Charles Diggle, United Kingdom (100%), received approval for the acquisition of a freehold interest in approximately 159.9 hectares of land at Far North Road, SH1, Northland. The vendor was King Avocado Limited, New Zealand (100%): Consideration was "withheld under section 9(2)(b)(ii) of the Official Information Act". The OIO states: "The land is currently being used to cultivate and farm avocados. The Applicant intends to take over and develop the avocado growing operation on the land".
Detailed commentary on this deal and the hedge fund billionaire Stephen Diggle was reported by Hugh Stringleman at www.agrihq.co.nz. "Billionaire Englishman Stephen Diggle wants to put his wealth in land assets around the world and has bought New Zealand's largest avocado orchard. The sale of King Avocado was approved last month by the Overseas Investment Office. Stephen Diggle wants to buy land, lots of it, in many places around the world. Diversification in location and types of primary industries would guard against catastrophic risks faced by individual farms, he said.
"The successful hedge fund manager wants to move out of equity markets, especially derivatives, to put his roots down. He founded Vulpes Agricultural Land Investment Company of Singapore, where he lives, and amassed a fortune in the first decade of the century. The United Kingdom-born, Oxford-educated, trader regarded the global financial crisis as a great wake-up call. In seeking investors for Vulpes, Diggle spoke in 2012 of the now-failed investment banks that were his early employers as a derivatives trader, and the whole house of cards that is central bank economic stimulus known as quantitative easing or money printing. 'Farmland is the ultimate store of value', he said.
"Diggle co-founded Artradis hedge fund in 2001 that grew to $US2.5 billion by being 'correctly positioned during the collapse of financial markets in 2007-08. We made a lot of money for our investors and, by being heavily invested in our own funds; we did pretty well for ourselves. Despite being an experienced hedge fund manager, I now believe one of the most compelling trades lies in agriculture'. Diggle denied any expertise in farming, having worked only one summer in the UK during his studies. 'What I learned from that is farming is extremely hard work'. The compelling proposition of farmland ownership, however, lay in the rising world population plus globalisation, which led to higher incomes and improved diets. He then mentioned the levelling out of crop yields after the Green Revolution, reducing availability of phosphate, increasing weather extremes and the age of western farmers, whose children didn't want to stay on the land.
"He concluded that the world population would almost certainly rise to 10-11 billion within a generation, the likelihood of a second Green Revolution was low, many more people would aspire to eat and be able to afford meat and the central banks would keep on printing money. 'It all adds up to rising long-term food prices for the foreseeable future'. Diggle began investing in farms in 2009, firstly 3,000ha in Uruguay for cattle, sheep and timber, then 500ha in the United States Mid-West for cropping and a 21.5ha kiwifruit and avocado orchard at Maungatapere in Northland. He put those farms into Vulpes, of which he was the sole shareholder. It had an asset value of $250 million in 2012.
"Vulpes was seeking $150m outside investment, it was reported. With the new funding, Diggle planned to diversify the portfolio by geography, products, weather and government interference, he said. He was considering possible investments in Zambia, Malawi and Mozambique in Africa and Ukraine or Bulgaria in Eastern Europe. The NZ representative for Vulpes is Alistair Nicholson, a Queenstown resident who also has an avocado orchard at Maungatapere. He said King Avocado was the first of what were expected to be several NZ horticultural investments by VALIC NZ (Vulpes Agricultural Land Investment Company). Nicholson would not comment on the transaction price, citing commercial sensitivity.
"Nicholson said VALIC NZ was committed through the OIO to plant another 20,000 trees on King orchard. 'We have great access to water, a conducive climate and skilled workforce, unique access to Australia and proximity to Asian markets as well as first world legal and financial infrastructure. A cohesive vision, long term and patient capital and some aggregation of small or subscale producers should enable us to fully realise our potential'. After talking to him in Singapore, Nicholson also added to Diggle's 2012 investment strategy presentation, saying that Vulpes now targeted higher-yielding orchard assets with some unique factors.
"'Since Stephen gave that talk low inflation and quantitative easing have modified the economic climate further. We very much like the global supply and demand position for avocados, as consumption is yet low and they are viewed as a nutritionally dense food. Demand is growing by 10% annually and supply by 3-5%. While the higher NZ dollar value is a challenge, we believe King has the scale and IP to be a good platform for a globally competitive industry'". See our April 2011 commentary for details of Diggle's Maungatapere purchase.
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