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Foreign investment in Aotearoa/New Zealand
Overseas Investment Office - July 2022 Decision
Buying Up Bus Companies Continues Unabated
This has been a theme of OIO Decisions in the past couple of years - the purchase of NZ bus companies by foreign companies, quite often private equity funds. In August 2021, the OIO approved IGC Kinetic Trust buying Go Bus (see Watchdog 158, December 2021) And, in December 2021, the OIO approved Rome NZ Bidco Limited and Rome NZ Propco Limited buying Ritchies (see Watchdog 159, April 2022).
In July 2022, the OIO approved Kinetic NZ Holdings Limited Canada (51.4%), Australia (22.6%), United States of America (5.5%), Japan (4.4%), South Korea (1.9%), Switzerland (0.5%), Israel (0.2%), Various (13.5%) buying up to 100% of the shares in NZB Holdco Limited (NZ Bus) which is owned as follows: Australia (38.6%), Cayman Islands (23.5%), United Kingdom (15.6%), Luxembourg (7.9%), New Zealand (6.4%), United States of America (4.3%), Channel Islands (3.7%). So, it was already foreign-owned and has now been sold to another foreign owner. The price is withheld.
The OIO states: "The Applicant, along with its parent company and its subsidiaries, provides 'people moving' transit services in New Zealand and Australia. It owns:
- Go Bus, New Zealand's largest operator of passenger service vehicles, offering services including urban, school, special needs, charter and tour transport options;
- Airside bus service under contract to Auckland Airport; and
- Skybus services at various airports in Australia".
"The Applicant has been granted consent to acquire up to 100% of the shares in NZ Bus. NZ Bus is New Zealand's largest metro bus operator with operations in the key population hubs of Auckland, Wellington and Tauranga. It operates a fleet of 800 buses from 14 depots and employs approximately 1,300 people. It leases depots around New Zealand, of which three comprise interests considered sensitive land under the Act".
"The Investment is likely to result in the creation of new permanent jobs (driver positions), additional investment for development purposes, benefits to the natural environment, continued or enhanced protection of historic heritage (for one of the depots), and advance significant government policies. It also met the national interest test. The Applicant has satisfied the investor test".
"Kinetic is Australasia's biggest bus company, with 5,800 people, 3,800 buses and 83 depots across New Zealand and Australia... The purchase of NZ Bus will see more than 1400 people, 800 buses and 14 depots added to its operations... Australia's Financial Review understood the sale price to be just over $400 million" (Stuff, 14/4/22). NZ Bus had previously been involved in a lengthy industrial dispute with its drivers, which led to a rebuke from its various council clients. Its owner was Next Capital, an Australian private equity fund which, in turn, had bought it from Infratil in 2019.
Infratil (which specialises in buying up infrastructure and utilities, hence its name) was a Roger Award finalist in both 2008 and 09. As I wrote in 2009, "Infratil is there again, as it was in 2008, because of union bashing (specifically for locking out Auckland bus drivers by its NZ Bus subsidiary. Last year it was for NZ Bus locking out its Wellington workers. Do you detect a pattern emerging here?)".
For an excellent and recent national overview of the sad state of the country's bus industry, see "From Private Equity To Public Ownership: The Case For Reform In The Bus Industry" by Edward Miller, Researcher and Policy Analyst at FIRST Union, (Watchdog 159, April 2022). What Ed is arguing for is encapsulated in his article's title. The Government has put a lot of faith in public transport, of which buses are a key component, as one of its ways of mitigating climate change. If it is serious, it will have to do something to sort out a bus industry that is currently a profitable plaything for transnational private equity funds.
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