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Foreign investment in Aotearoa/New Zealand
Overseas Investment Office - May 2017 Decisions
Downer Takeover Of Spotless
Downer EDI Services PTY Ltd (Australia 47.3%; Various 35.2%; UK 10.2%; USA 7%; NZ 0.3%) has consent to acquire 100% of the shares of Spotless Group Holdings Ltd (Australian Public 99.5%; various overseas 0.5%), which leases approximately 2.5304 hectares at 1A Carrington Road, Point Chevalier, Auckland. Price $327.9 million, as at 30 June 2016. The OIO states that the applicant’s parent company Downer EDI Ltd, an ASX listed company, is a transnational providing outsourced engineering, infrastructure and other services.
Downer EDI Services is a 15% shareholder in Spotless and has made a takeover offer for Spotless’s remaining shares. Downer considers that Spotless’ financial performance indicates it could be operated more efficiently and that it is well positioned to do this, as it has a long history of acquiring, integrating and operating other businesses, including in New Zealand. The transaction satisfied the s.16 criteria of the Overseas Investment Act 2005, with benefit to New Zealand under s.28(a) – Consequential benefits; s.28(c) – Affect image, trade or international relations; s.28(e) – Previous investments.
Stuff reports that the acquisition will create the largest diversified and integrated services manager in Australia and New Zealand (Stuff, 21/3/17). Downer’s 2017 Annual Report says this continues Downer’s transformation towards a more services-focused business.
Downer currently contracts services in transport, rail, technology and communications, utilities (includes facilities maintenance), engineering, construction and maintenance, employing approximately 19,000 people across more than 200 sites and projects in Australia, New Zealand, the Pacific Islands, Papua New Guinea, Chile and South Africa.
Spotless’s Website says it operates in Australia and New Zealand and providing outsourced facility services, cleaning, catering and laundry services, technical and engineering services, maintenance and asset management services and refrigeration solutions to various industries. Its customers include corporations and Government departments (including Defence), agencies and local authorities in both countries. Spotless greatly expanded its New Zealand operations in the 1990s when the public sector began contracting out cleaning, meals and other services to cut costs, with currently 8,300 employees in NZ and 27,700 in Australia.
It was a joint runner-up for the Roger Award For The Worst Transnational Corporation Operating In Aotearoa/New Zealand In 2007 (see Alastair Duncan’s “The Aussie, The Brit And The Dane: How Three Overseas Corporates Are Keeping A Lid On Cleaners’ Pay”, in Watchdog 141, April 2016). In June 2012 Pacific Industrial Services BidCo got OIO consent about this same Point Chevalier site in a takeover of Spotless Group. For other OIO Decisions involving Spotless, see September 2009, June 2012 (Wiri Prison), January and October 1994, and September 2009 (takeover of Taylor’s Laundries).
Back to TopCraigmore Buys Another Dairy Farm
Craigmore Dairy II LP (European Organisation for Nuclear Research [CERN], European Public 58.8%; Aurum Agrar GmbH & Co KG, Germany 23.5%; Stefan Jentzsch, UK 7.7%; Golien Ltd, Hong Kong (SAR) 4.2%; Forbes Herbert Elworthy, NZ 2.8%; various overseas 2.1%; various NZ 0.9%) has consent to acquire approximately 426 hectares at 1062 Carleton Road, Oxford from Magnum Dairy Ltd (Prattley Family, NZ 99.9%; Michael Peter Prattley, NZ 0.05%; Anne Marie Prattley, NZ 0.05%) for $18.25 million.
The OIO states that the land to be acquired is currently farmed as a dairy farm and Craigmore Dairy’s operation of it is likely to result in increases in milk production, processing in New Zealand and export receipts. Craigmore Dairy says the acquisition will lead to greater efficiency and productivity, a full-time-equivalent job opportunity and capital expenditure on several development projects.
The transaction satisfied the s.16 criteria of the Overseas Investment Act 2005 with substantial and identifiable benefit to New Zealand under s.17(2)(a)(i) – Jobs; s.17(2)(a)(iii) – Increased export receipts; s.17(2)(a)(iv) – Greater efficiency or productivity; s.17(2)(a)(v) – Additional investment for development purposes; 17(2)(a)(vi) – Increased processing of primary products, and under Regulations 28(a) – Consequential benefits and 28(j) – Oversight and participation by New Zealanders.
Craigmore Dairy is part of the Craigmore Farming Group, founded by New Zealand citizen Forbes Elworthy and now partly owned by those people who dug the big hole under Switzerland looking for the Higgs boson particle (i.e. CERN). For more OIO Decisions related to Craigmore Farming, see June 2012, February 2013, March 2013, November 2013, December 2013, March 2014, April 2014, May 2014, June 2014, July 2014, August 2014, November 2014, June 2015, July 2015, September 2015 and August 2017.
Back to TopAustralian Pig And Gene Breeders Buy Waitaki Sheep And Beef Farm
Bardfield Farms Ltd (Mark Purcell Tapper, NZ 33.3%; Alpair Pty Ltd, Australia 22.3%; Doug Hall Poultry Pty Ltd, Australia 22.2%; Campastco Pty Ltd Australia 22.2%) has consent to acquire approximately 208.6 hectares at 60 Pilbrow Road, Palmerston, Waitaki, Otago, from Kerry William Chittock, Jacqueline Fay Chittock and Barry Rae Harvey (NZ 100%) for $3.4 million.
The OIO states that Bardfield Farms is a swine farming and genetics company operating in New Zealand and Australia. The land is currently a sheep and beef farm which Bardfield plans to convert to a free range pig farm, saying this will involve significant capital expenditure and create new jobs and substantially increase revenue. New Zealand interests will be involved in investment at governance level and as a minority shareholder. The Shag River bed will be offered to the Crown at no cost.
The transaction satisfied the s.16 criteria of the Overseas Investment Act 2005, with substantial and identifiable benefit to New Zealand under sl.17(2)(a)(i) – Jobs; s.17(2)(a)(iv) – Greater productivity and efficiency; s.17(2)(f) – Offer to sell riverbed to the Crown; and Regulations 28(a) – Consequential benefits.
NZ Herald rural news reported that Waitaki District Council gave consent to run about 400 breeding sows and piglets on the property using portable shelters and farrowing huts. Traditionally, outdoor pigs were farmed in the Canterbury region but had come under pressure from dairying. Bardfield proposed this would be a “showpiece” free range pig farm (Sally Rae, NZ Herald, 3/7/17). For other OIO Decisions related to Bardfield Farms, see: October 2009, November 2011, and July 2014.
Back to TopChinese Buy Stratford Abattoir
Sunner NZ Ltd (Guangming Fu, China, PR of 61.25%; Yipi Zhou, PR China, People's Republic of, 10%, Shaowei Gu, PR China 10%; Li Yuanyuan, PR China 10%; Fenfang Fu, PR China 8.8%) has consent to acquire 13 hectares of sensitive land at 3396 Mountain Road, Stratford from Gold International Holdings Ltd (Guoqiang Zhang, PR China 100%) for $1,220,000.
The OIO states that in 2016 Sunner NZ bought the Taranaki abattoir including a short-term lease over this land, and is now buying the freehold. They say they have undertaken initial upgrades at the abattoir and propose further development in order to export red meat to the Chinese market. Sunner says that the abattoir would otherwise be likely to close, so their investment will retain 25 jobs.
The transaction satisfied the s.16 criteria of the Overseas Investment Act 2005, with substantial and identifiable benefit to New Zealand under s.17(2)(a)(i) – Jobs; s.17(2)(a)(v) – Additional investment for development purposes; 17(2)(e) – Walking access; s.17(2)(f) – Offer to sell riverbed to the Crown; and Regulation 28(e) – Previous investments.
See the OIO Decisions of July 2014 for Gold International’s consent to buy the abattoir from Taranaki Abattoir Co. (1992) Ltd (NZ 100%) for $2 million, and the effect on killing services for local farmers. Stuff reports that in June 2017 the first shipment of locally-sourced beef from the Stratford abattoir was sent to China (Stuff, 4/7/17).
Back to TopWaste Management Extends Lease On Puketutu Island
Waste Management NZ Ltd (Chinese government, 50.5%, China public 49.5%) has consent to acquire a leasehold interest in approximately 12 hectares at 600 Island Road, Puketutu Island, Mangere Harbour from the Auckland City Council. Price is $4,646,446.
The OIO states that Waste Management is a large recycling and waste services company with significant investments in New Zealand. It currently operates a green-waste composting facility on this land which is leased from Auckland Council until 8 January 2028. This transaction will extend the lease for ten years with a slight boundary adjustment (without changing the total area). This will increase Waste Management’s security of tenure.
The applicant says it will fund an environmental restoration plan for Puketutu Island and contribute 1000m3 of compost for that plan. The transaction satisfied the s.16 criteria of the Overseas Investment Act 2005, with substantial and identifiable benefit to New Zealand under s.28(a) – Consequential benefits, s.28(e) – Previous investments, s.28(g) – Enhance the viability of other investments.
Waste Management’s Website says it is NZ’s largest waste management business. CAFCA has monitored a series of OIO Decisions as the industry consolidated, with Waste Management coming under US ownership by Transpacific Industries Group (see Watchdogs 92, 93 and 103; OIO Decisions June 2006), and since June 2014 under Chinese ownership. It has recently come to public attention for fire-hazardous stockpiling of millions of tyres in Frankton, Waikato (Matt Shand, Stuff, 7/10/17).
Back to TopNelson Forests/Global investors Buy Ngāti Rārua Settlement Forest
Nelson Forests Ltd (US public 48%; various overseas 27%; Australian public 13%; Danish public 9%; NZ public 3%) has consent to acquire approximately 9,454 hectares in Wairau Valley, Marlborough from approximately 9,454 hectares of land at Wairau Valley, Marlborough from the Ngāti Rārua Settlement Trust (NZ 100%). Price withheld.
The OIO states that Nelson Forests currently has the Crown Forestry licence over the land. The Ngāti Rārua Settlement Trust is acquiring the land from the Crown as part of a Treaty of Waitangi settlement and wishes to sell it to fund other significant projects to develop the iwi’s economic and social wellbeing. Nelson Forests Ltd also owns the Kaituna Sawmill in Marlborough, with around 40% of the mill’s wood supply coming from this the land. It has recently made substantial investments in the mill and says this acquisition will secure supply to ensure continued operations.
The transaction satisfied the s.16 criteria of the Overseas Investment Act 2005, with substantial and identifiable benefit to New Zealand under s.17(2)(a)(i) – Jobs; s.17(2)(a)(v) – Additional investment for development purposes; s.17(2)(a)(vi) – Increased processing of primary products; 17(2)(b) – Indigenous vegetation/fauna; 17(2)(e) – Walking access; and Regulations 28(a) – Consequential benefits; 28(d) – Owner to undertake other significant investment; 28(e) – Previous investments; 28(g) – Enhance the viability of other investments.
Nelson Forests Ltd’s Website says it owns 78,000 hectares of radiata pine in Nelson and Marlborough, with an annual harvest of 1.1 million m3 of logs, 70% for the domestic market, 30% for export to mainly China and Korea. Its Kaituna Sawmill processes 55,000m m3 of timber a year. Originally State-owned forests acquired by Fletcher Challenge, Nelson Forests became part of a US company joint venture, followed by a joint venture purchase by Weyerhaeuser NZ in 1997 (see OIO Decisions June and July 1997).
It was then acquired by an investment fund managed by Global Forest Partners LP (see OIO, October 1007), a New Hampshire based forestry investment company that states its “primary objective is delivering superior risk-adjusted returns to investors… through the complete investment cycle from acquisition through [to] divestiture”.
They manage over 750,000 hectares of timberland in Australia, Brazil, Cambodia, Chile, Colombia, Guatemala, Uruguay and south-eastern USA, as well as New Zealand since 1992. Global Forests uses a local management team, Nelson Management Ltd. Nelson Forests Ltd announced it would be up for sale in 2017 (Jonathan Carson, Stuff, 22/6/17).
Back to TopToll Network Land Swap Near Auckland Railway
Toll Networks (NZ) Ltd (Government of Japan 100%) has consent to acquire approximately 17.2 hectares at 259 James Fletcher Drive, Otahuhu, Auckland, and approximately 8400 m2 at 193 James Fletcher Drive, Auckland via a land swap with Pacific Steel (NZ) Ltd (Australian public 55%; various 20.4%; US public 16.1%; UK public 8.7%) and Fletcher Steel Ltd (NZ public 27.5%; various overseas 19.3%; Australian public 19.2%; North American public 18.3%; UK public 6.5%; European public 5.1%; Asian public 4%), for a consideration of $59,520,136.
The OIO states that Toll Networks is a large freight forwarding and logistics company, which intends to construct a new freight forwarding facility on land with access to the KiwiRail network, so as to centralise its operations in Auckland. Toll states that the investment is likely to involve substantial development capital in the new facility, employment opportunities and increased efficiency in freight handling and its Auckland operations.
The transaction satisfied the s.16 criteria of the Overseas Investment Act 2005, with benefit to New Zealand under s.17(2)(a)(i) – Jobs; s.17(2)(a)(iv) – Greater efficiency or productivity; s.17(2)(a)(v) – Additional investment for development purposes, and Regulation 28(e) – Previous investments.
Toll NZ’s Website describes it as New Zealand’s largest domestic freight forwarder for parcels and freight, domestically and internationally, using national rail, road and sea multimodal transport services, backed by the global resources and networks of the Toll Group. It reported a loss of $14.2 million in the year to March 2017 following the Kaikoura earthquake’s disruption of supply routes (NZ Herald, 6/9/17).
Toll began life in Newcastle, NSW in 1888 with Albert Toll hauling coal. Owned by mining companies from 1959, it became a national carrier. It was bought by its management team in 1986 and began acquiring other carriers, then listed on ASX in 1993. Expanding to NZ, Toll Holdings bought up the rail network, wrecked it, then sold back to us (OIO, August 2003) and has been a frequent runner-up for Roger Awards.
See these articles by Joe Hendren “Toll: Secret Deals Close To The Witching Hour Revealed” and “From Toll To The Dole: Australian TNC Bullies Its Workforce’, in Watchdog 106, August 2004, and by Murray Horton, “The Mounting Toll Of Foreign Ownership Of Our Railways”, in Watchdog 113, December 2006, and “Sharks In The Water: Privatisation Rears Its Ugly Head Again”, in Watchdog 118, August 2008.
In May 2015, Toll became a division of Japan Post after an acquisition process supported by Toll’s Board and shareholders – at a cost of $A6.5 million (see OIO, May 2015 re NZ land). In November 2015, Japan Post, Japan Post Insurance and Japan Post Bank were listed the Tokyo Stock Exchange so Japan Post Holdings could sell 11% of the shares in each of them.
Back to TopPrivate Equity Syndicate Buys Auckland Office Development
CC Hera Trust Pte. Ltd. (Netherlands public 16.2%; Switzerland public 16.2%; Germany public 14.5%;
UK public 9.8%; USA public 9.7%; Denmark public 9.7%; Azerbaijan public 9.6%; Luxembourg public 9.3%; various 5%) has consent to acquire approximately 0.218 hectares at 46 Sales Street, Auckland, behind Victoria Park Market, from Manson’s Properties (Parnell) Ltd (NZ 100%) for a price exceeding $100 million – that is, $114,531,968.
The OIO states that CC Hera Trust is part of the PAG Group, an alternative investment management firm focussed on three core strategies: private equity, real estate and absolute return. Manson’s is currently constructing an office building on the land and negotiating leases with future tenants. The overseas investment transaction has satisfied the criteria in section 18 of the Overseas Investment Act 2005.
PAG’s Website says it is one of Asia’s largest alternative investment management firms, founded in 2002 and now managing a diverse array of funds in private equity, real estate and absolute return strategies, with approximately $US18 billion in funds under management. CC Hera Trust Pte Ltd was registered in Singapore on 9 March 2017 and in NZ as an overseas non-ASIC branch on 13 March 2017 (ASIC – Australian Securities and Investments Commission). See business analyst Bryan Gaynor on how property syndicates work, exampling a similar Manson’s Properties development nearby (NZ Herald 22/10/16).
Back to TopCigarettes Transnational CEO Buys Northland Organic Farm
Andre and Malgorzata Calantzopoulos (Switzerland 100%) have consent to acquire 316.4 hectares at 489 Pungaere Road, Waipapa, Northland from Pukenui Holdings Ltd (Bonham: Haydn Kerwin and Joanne Margaret) as trustees of the H&J Family Trust, NZ 98%; Joanne Margaret Bonham, NZ 1% and Haydn Kerwin Bonham, NZ 1%). Price is $8.5 million.
The OIO says the applicants plan to farm the land on permaculture principles for breeding beef cattle and sheep; and to protect and enhance indigenous vegetation and fauna on the land and its surrounds, with a QEII covenant for two significant areas of indigenous forest, additional fencing for other areas, native plantings along the Kerikeri River, and pest control to create a predator free corridor from the land to the nearby Puketi Forest. These proposals will advance the Government’s Predator Free policy and Kiwi Recovery Plan. The Calantzopouloses plan to provide or improve walking access, with a poled walkway route, and an esplanade beside the Kerikeri River.
The transaction satisfied s. 16 of the Overseas Investment Act 2005, with ‘substantial and identifiable benefit to New Zealand' under s.17(2)(b) – Indigenous vegetation/fauna; s.17(2)(e) – Walking access, s.17(2)(f) – Offer to sell seabed/foreshore/riverbed to the Crown, and Regulations 2005 28(a) – Consequential benefits and 28(f) – Advance significant Government policy or strategy. See OIO June 2017 in regard to a residential house for this couple.
Andre Calantzopoulos is not just any old foreigner buying NZ land. He is, in fact, Chief Executive Officer of Phillip Morris International. “The Chief Executive of a company that manufactures a product regarded as the single greatest cause of preventable death globally plans to farm in New Zealand according to the healthiest principles…Greek-born Calantzopoulos has been the CEO of the tobacco giant since 2013, and the 60-year-old has worked for it since the age of 28. In 2008 the World Health Organisation (WHO) described tobacco as ‘the single most preventable cause of death in the world today’. Each year it kills 5.4 million people, and it is estimated by 2030 the death toll will rise to eight million a year…”
“The OIO withheld the amount Calantzopoulos paid for the two properties, but he would have little difficulty in financing the deal. According to the publication Barron's Asia, in 2014 he owned 695,000 shares in Philip Morris. At today's prices they would be worth just over $106 million. In an article in the same year, Forbes magazine described him as a ‘pack-a-day-man’ who was spearheading an attempt to move Philip Morris into the lucrative e-cigarette market” (Stuff, 1/8/17, Gerard Hutching).
Growing Capsicum In Warkworth
Southern Paprika Ltd (Hamish and Robyn Alexander, NZ 50%; Hubertus Jozephus Levarht, Stefan Rene Levarht, Franciscus Cornelis Levarht, and family, Netherlands 50%) have acquired approximately 15.5 hectares at 40 Carran Road, Warkworth; and approximately 1.7 hectares of land at 361 Kaipara Flats Road, Warkworth from Dean James and Marjorie Roseanne Blythen (NZ 100%), and Harvey Daniel Carran (NZ 100%). Price $1,077,000.
The OIO states that Southern Paprika is a capsicum grower that wants to expand its glasshouses onto adjoining land. They plan to develop up to 14 hectares of new glasshouses and a packhouse over the next ten years. They say this will introduce significant capital for development purposes and result in a significant number of new jobs.
The transaction satisfied the s.16 criteria of the Overseas Investment Act 2005, with substantial and identifiable benefit to New Zealand under s.17(2)(a)(i) – Jobs 17(2)(a)(iii) – Increased export receipts; s.17(2)(a)(iv) – Greater efficiency or productivity; s.17(2)(a)(v) – Additional investment for development purposes; and Regulations 28(a) – Consequential benefits; 28(e) – Previous investments; 28(g) – Enhance the viability of other investments; 28(j) – Oversight and participation by New Zealanders.
Southern Paprika is a 1998 joint venture between The Levarht Company of Holland and Alexander Cropping Ltd (NZ), which began growing vegetables outdoors in 1988, then moved to glasshouses. It now has 23 hectares of glasshouses growing capsicum for supermarket chains and markets in Japan, Australia and Canada, as well as New Zealand. Levarht Produce Group has operations in Holland, Belgium, Costa Rica, a “Fresh Mex” partnership in Mexico, and supplies capsicums year round to the USA, Canada, Japan, far East, Europe and Russia.
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