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Overseas Investment Office – March 2021 Decisions

Byron Clark

Mystery Meat Company Acquisition Declined

The Minister for Land Information and the Associate Minister of Finance have declined an application from an unnamed meat and animal by-products company to acquire 60% of the share of another unnamed company for an undisclosed amount. The applicant said the investment would expand NZ meat exports, provide greater financing to NZ farmers, and introduce new supply chain technology. The Ministers considered that, due to the nature of the proposed investment plan, there was uncertainty about the likelihood and the level of these benefits and they were ultimately not satisfied it would result in substantial and identifiable benefit to NZ.

Mystery Fishing Quota Acquisition Declined…

The name of the applicant, the quota and the background were all withheld. The Minister for Oceans and Fisheries and the Associate Minister of Finance needed to be satisfied that the consent was in the national interest, having regard to factors in s. 57H (2) of the Fisheries Act 1996. The Ministers were not satisfied and therefore declined consent.

… But Retrospective Mussel Quota Consents Granted For Biomex/MacLab

The Minister for Oceans and Fisheries and the Associate Minister of Finance have granted retrospective consent for Biomex Trustees Ltd (as trustee for the Biomex Trust) (Australia 100%) to acquire fishing quota being one million quota shares of GLM7A from Nelson Mussels Ltd; and 388,889 quota shares of GLM9 from Robbie Denison and Robyn Denison as trustees of the Arelde Trust (NZ 100%) for approximately $52,800 in total.

The OIO states that Biomex Trustees is ultimately owned by an Australian family which has been involved in mussel farming and processing since the 1970s, and is closely linked with what is now the MacLab business. This quota is used by MacLab to grow mussels for use in the extraction of compounds for the nutraceutical industry (i.e., non-pharmaceutical food containing health-giving properties). MacLab owns and operates a number of mussel factories in the South Island, and a processing factory in Nelson.

This is a retrospective consent relating to acquisitions of quota in 2007 and 2013 made by a director of Biomex Trustees who has since left, and it is now not clear why consent was not sought. The failure appears to have been inadvertent. The quota gave Biomex Trustees security of supply that resulted in it investing capital into the NZ business, which in turn resulted in processing of mussels and sales revenue. Given the relatively small amounts of quota acquired and the benefits generated, the acquisitions were considered to be in the national interest.

MacLab’s Website says it was founded in 1973 by brothers Jim and Bill Broadbent who pioneered the green-lipped mussel nutraceutical market. The directors of Biomex Trust Ltd, both Broadbents, are also directors of MacLab (NZ) Ltd and Maclab Australia Pty Ltd. Note a 2020 High Court stoush between Biomex Trustees and the long-term manager of their mussel operations (Mike Ross Law Blog, 19/5/20).

US Couple Declined Consent For Mānuka/Honey Farm

The Minister for Land Information and the Associate Minister of Finance declined consent for an unnamed US couple to acquire 131.4761 ha. in Waimarama Road, Waimarama, Hawkes Bay from an unnamed vendor for an undisclosed price. The applicants proposed to plant 60 ha. in mānuka trees to produce honey for export and build a 1.86 km access road to two building lots. Ministers O’Connor and Wood were not satisfied that the investment would result in a substantial and identifiable benefit to New Zealand.

Kauri Forestry/Craigmore Gets A Rubber Stamp

The Minister for Land Information and the Associate Minister of Finance have granted a Standing Consent to Kauri Forestry LP (Switzerland 93%; Germany 7%). The OIO states that Kauri Forestry is part of Craigmore Sustainables Group, which currently manages forestry blocks covering approximately 16,645 hectares. It sought a standing consent to acquire further land for predominantly commercial forestry purposes. This was granted by the Ministers under s.23A and Sch.4 (3) of the Act. Kauri Forestry must notify the OIO each time it settles a transaction and comply with other conditions:

  • no more than 6,000 ha. in total,
  • a maximum of 2,500 ha. per transaction for land already used exclusively or nearly exclusively for forestry activities;
  • a maximum of 500 ha. per transaction for land that is non-forest land (including farm land for conversion);
  • a maximum of 20 transactions;
  • the standing consent permits acquisitions of land nationwide;
  • the standing consent cannot be used to acquire an investment in a strategically important business; and
  • the standing consent expires on 30 September 2023.

Kauri Forestry Limited Partnership is a forestry business built, managed and governed by Craigmore Sustainables, in partnership with off-shore money. See more in our commentary of July 2019, and other consents for Kauri Forestry in June, September and October 2019.

Matariki Forests Gets A Rubber Stamp

The Minister for Land Information and the Associate Minister of Finance have granted a special forestry Standing Consent to Matariki Forests (USA 63.1%; UK 16.2%, various 9.9%, Luxembourg 9.1%; Switzerland 1.7%). The OIO states that Matariki is one of NZ’s largest forest owners/managers, with approximately 119,241 ha. of productive forest area.

It sought standing consent to replenish its existing estate footprint as non-freehold interests expire, and buy new forest land, forestry rights or pastoral land for afforestation as opportunities arise. The standing consent was granted by the Ministers under s. 23A and Sch. 4 (3) of the Act. Matariki Forests must notify the OIO each time it settles a transaction under the standing consent and must comply with other conditions:

  • no more than 10,000 ha. in total,
  • a maximum of 2,500 ha. per transaction for land already used exclusively or nearly exclusively for forestry activities;
  • a maximum of 500 ha. per transaction for non-forest land (including farm land for conversion);
  • a maximum of 12 transactions;
  • only land located in North Auckland, South Auckland, Hawkes Bay, Gisborne, Wellington, Canterbury, Westland, Otago and Southland land registration districts;
  • the standing consent cannot be used to acquire a strategically important business; and
  • the standing consent expires on 30 September 2023.

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… Plus A One-Off Purchase Of Waerenga Forest, Waikato

Matariki Forests (USA 75.4%; UK 9.2%; Luxembourg 6.2%; various 3.5%; Germany 2.2%, Cuba 1.9%, Switzerland 1.7%) has consent to acquire approximately 401.5819 ha. at 354 Waipuna Road, Waerenga, Te Kauwhata, Waikato, from Waerenga Forest Ltd, Wairakau Forest Ltd and Bezique Company Ltd (NZ 100%) for $12,720,000.

The OIO states that Matariki Forests applied under the special test for forestry activities in s.16A (4) of the Act. The land is already a commercial forest, with approximately 353 ha. in trees aged 19-24 years. The remaining approximately 48 ha. is unsuitable for planting and includes riparian areas. Matariki is purchasing the forest to secure on-going timber supply. It intends to harvest the existing crop and replant. There are no existing arrangements in relation to the land.

In October 2019 Matariki Forests was listed by RNZ as the fourth largest private land owner in NZ with 73,509 ha. (RNZ 17/10/19). Then it acquired a couple more; see consents in December 2019. Matariki is three-quarters owned by US logging company Rayonier, which partners with OneFortyOne in Australia – see commentary of January 2019. The owner of the other quarter is Waimarie Forests Pty Ltd, Australia.

German Insurance Giant Munich Re Buys NZ Forests

Ponga Silva Ltd (Germany 43.5%; USA 19.2%; UK 15.7%; France 7%; Switzerland 4.9%; Luxembourg 4.3%; Ireland 1.8%; various 3.6%) has consent to acquire approximately:

  • a cross-lease interest in flats 3, 4, 5 and 6 at 505 Aberdeen Road, Te Hapara, Gisborne, comprising a 4/6th freehold share in approximately 0.2206 ha. and a leasehold interest in the flats;
  • approximately 0.5492 ha. freehold at 505 Aberdeen Road, Te Hapara, Gisborne; and
  • a lease of approximately 0.1403 ha. at 18-20 Chadlington Ave, Henderson, Auckland.

The vendor is Bupa Care Services NZ Ltd; price withheld.

The OIO states that Evolution Rehab is an NZ registered company ultimately wholly owned by Pacific Healthcare HoldCo Ltd, which is owned by overseas investment funds managed and/or advised by Pacific Equity Partners Pty Ltd (PEP), an Australian private equity fund manager, its affiliates and certain NZ- and Australia-based management shareholders. One of Pacific Healthcare HoldCo’s group of companies is in private healthcare, including providing facilities and patient care. Evolution Rehab is acquiring the Bupa property to provide patient accommodation and rehabilitation services.

The OIO considers this is likely to meet the incidental residential use test:

  • 65.2682 ha. at Dipton-Mossburn Road, Castle Downs, Southland (Castle Downs Forest);
  • 221.363 ha. at Bushy Park Road, Waimumu, Southland (Hokonui Forest);
  • 185.060 ha. at Waikana Road, Taringatura, Southland (Monavae Forest);
  • 400 ha. at Dipton Flat Road, Taringatura, Southland (Pinnacle Pine Forest);
  • 637.8184 ha. at McDonald Road, Taringatura, Southland (Rugged Hills Forest)
  • 637.6691 ha. at Lawrence Road and Miller Road, Waitane, Southland (Waitane Forest)

from Craigpine Timber Ltd (Australia 57.3%; UK 42.7%). Price withheld.

The OIO states that Ponga Silva applied under the special test for forestry activities in s.16A (4) of the Act. Ponga Silva is a special purpose investment vehicle wholly-owned by a German company. The six parcels of land are all current forestry blocks. Approximately 1,814.8 ha. is mostly radiata pine with some Douglas fir, of mixed age. The remaining 332.5 ha. is unplantable land in native bush, buffer land, setbacks and riparian planting. The applicant intends to replant after harvest.

Ponga Silva was registered in NZ in December 2020. Its German owner is Münchener Rückversicherungs-Gesellschaft Aktiengesellschaft, known as Munich RE, with revenue of €51.4 billion in 2019. It is in the reinsurance and insurance business, including reinsurance in Australia and NZ.

Its’ Website notes that 2011 was the costliest year ever in terms of natural catastrophe losses, with the Christchurch and Japan earthquakes causing two-thirds of that, and right now the insurance industry is dealing with the hurricane season. That’s what Munich Re is for, it says. Better for Munich Re to invest its back-up cash in pine trees rather than in buildings, I guess.

Ellis Campbell UK Buys Its Fifth Forest

Ellis Campbell (NZ) Ltd (UK 100%) has consent to acquire approximately 227.1725 ha. at SH 63 Wairau Valley, Marlborough (Mt Olympus Forest) from Mount Olympus Forestry Ltd (NZ 100%) for $1,521,000. The OIO states that Ellis Campbell (NZ) applied under the special test for forestry in s.16A (4) of the Act.

It is a subsidiary of a family-owned UK company which currently holds four other forestry assets. Its first NZ forestry investment was made in 1998. The land is forestry land harvested in 2019/20 so it is being acquired in a cutover state. 213 ha. will be replanted as a commercial forest, 19 ha. will be used for forestry-related infrastructure and five hectares will be buffer land. It will be replanted after harvest.

The UK company is listed as Ellis & Sons Amalgamated Properties Ltd, Hampshire. The Ellis Campbell Group Website describes it as a fifth-generation private family investment office, which has owned and managed commercial and residential rental property since 1877. See May 1995, September 1998, March 2020 and January 2021 for its other forestry consents.

German Couple Buy Hastings Farm For Forestry Conversion

Dr Hans Otto Rudolf Albrecht and Ursula Albrecht (Germany 100%) have consent to acquire approximately 572.2588 ha. at 167 Beattie Road, Eskdale, Hastings (Bay View Station), from Bremner Pastoral Properties Ltd (NZ 100%) for $7,050,000. The OIO states that the Albrechts applied under the special test for forestry in s.16A(4) of the Act. Currently 430.8588 ha. is grazed by sheep and beef stock and there is 19 ha. in forest. The Albrechts will plant a further 388.1 ha. as commercial forest.

Approximately 29.6 ha. have a residential dwelling and farm buildings, which will be subdivided off and sold. Of the remainder, 45.4 ha. is in native bush and 90.1 ha. of unplantable gullies, steep land, infrastructure and boundary and riparian setbacks. They intend to replant following harvest. The land is primarily Land Use Capability 7 (approximately 41.6 ha.) and LUC 6 (approximately 530.7 ha.) which are generally suitable for pastoral or forestry uses. Dr Albrecht is a holding company executive who has worked for IMM Business Systems and OLE.

Fletcher Residential Gets A Second Rubber Stamp, For Another 15 Land Purchases…

Fletcher Residential Ltd (Australia 55.5%; NZ 21%; US 13.3%; UK 5.4%; various 4.8%) has been given a second Standing Consent for Increased Housing & Non-Residential Use under ss.12(a), 23A and Sch.2 of the Act. This standing consent for a maximum of 15 transactions by 28 February 2024 will permit it to acquire up to 200 ha. of yet-to-be-identified residential freehold land in Auckland, Canterbury and Waikato. It and its associates are not permitted to occupy any such land and must sell all interests within ten years.

… And Uses No.4 Of Its First Standing Consent In Christchurch…

Fletcher Residential Ltd (NZ Public 21.8%; Australian Public 54.4%; various overseas 23.8%) has consent to acquire residential-only sensitive land, being approximately 10.1178 ha. at 68 and 70 Quaifes Road, Halswell, Christchurch, from Geoffrey Douglas Dench and Louise Margaret Dench (as trustees of the GD Dench Family Trust), and Hayden William Dench and Renae Elizabeth Low. Price withheld. The OIO states that Fletcher Residential was granted a standing consent based on Increased Housing/Non-Residential Use tests on 18 April 2019.This permits them to acquire up to 200ha of residential land in up to 12 transactions by 1 May 2022. This is the fourth acquisition.

Fletcher Residential intends to subdivide and develop the land, constructing approximately 150 new residential houses. It must increase the number of dwellings, or undertake development works, and must divest all interests in the land within ten years. See January, July and August 2020 for consents 1, 2 and 3 of the 12. See also September and December 2020 for other recent Fletcher Residential consents that were not part of the 12 or the 15.

Fletcher Building Plans An Industrial Development At Dairy Flat, Auckland…

Fletcher Development Ltd Australia 55.4%; NZ 21.3%; USA 13%; UK 5.5%; UAE 1.7%; rest of world 3.1%) has consent to acquire 20.2365 ha. at Dairy Flat Highway, Dairy Flat, Auckland, from Joyland Investment Ltd Ltd (NZ 100%). Price withheld. The OIO states that Fletcher Development is a wholly-owned subsidiary of Fletcher Building Ltd. It is developing the land to yield a minimum developable area of eight ha. for subdivision and creation of industrial lots.

The investment will enable oversight and participation by New Zealanders, likely additional investment for development, and job opportunities. John Creek runs through the land and the riverbed has been offered to the Crown. The Investment is stated to allow protection and enhancement of a portion of John Creek, and some public walking access will be created.

… And Extends Its Kaukapakapa Quarry

The Minister for Land Information and the Associate Minister of Finance have given consent for Fletcher Concrete and Infrastructure Ltd (Australia 51.5%; NZ 17.5%; USA 15.8%; UK 7.3%; Europe 4%; various 2.4%; Japan 1.5%) to acquire 8.3061 ha. at 614 Haruru Road, Kaukapakapa, and 35.9730 ha. at 648B Haruru Road, Kaukapakapa, from NZ individuals (100%). Price withheld.

The OIO states that Fletcher Concrete is a subsidiary of NZX and ASX-listed Fletcher Building Ltd. The land is a lifestyle block and tenanted dwelling near Fletcher’s Flat Top Quarry. The Quarry’s rock reserves are expected to be exhausted by about 2030, so Fletchers intends to expand it. This land will be buffer land for the planned expansion. This is expected to lead to the retention of jobs, continued processing of rock, and the advancement of NZ Upgrade Programme projects in North Auckland through the supply of processed rock.

The Ministers granted consent because they considered the benefit likely to be substantial and identifiable. The $12 billion NZ Upgrade Programme announced by the Prime Minister on 29 January 2020 includes rail, schools and hospitals and also significant roading projects – see Waka Kotahi/NZ Transport Agency (www.nzta.govt.nz/planning-and-investment/nz-upgrade).

KKR Private Equity Buys Argenta Animal Health

Mercurio Bidco Ltd (USA 47%; various 18.5%; Singapore 16%; Canada 11.5%; China PR 7%) has consent to acquire 100% of shares in Argenta Ltd , with approximately 40% of the consideration being reinvested by some vendors. The vendors are Harrogate Trustee Ltd as trustee of the Brandywine Trust, Tomlinson Group Argenta Ltd, Mark Gibson, Karalla Investments Ltd, David Geor and Susan Geor as trustees of the Orini Farm Trust (NZ 100%). Price withheld.

The OIO states that Argenta is a contract manufacturing and research provider specialising in animal health. Argenta was founded and is headquartered in NZ, but has expanded to also operate in the US and UK. Its future expansion plans require additional capital and market access. Mercurio Bidco will provide offshore knowledge and expertise.

Argenta has a couple of NZ registered companies and a LinkedIn entry that says it operates from R&D (research and development) locations in NZ and the US and (European Medicines Agency and US Food and Drug Administration) Good Manufacturing Practice-approved manufacturing sites in NZ, the UK (Scotland) and the US (Fort Dodge, Iowa). It was founded in NZ by Doug Cleverly who was “more at home in the lab than the boardroom”. The boardroom and reception seem to have been in the US for years.

Mercurio Bidco was registered in NZ in November 2020, with its ultimate holding company listed as KKR & Co, Inc. KKR & Co. Inc., a.k.a. Kohlberg Kravis Roberts, is registered in Delaware, the world’s first tax haven, but has its headquarters in New York. It is a US global investment company that “manages multiple alternative asset classes, including private equity, energy, infrastructure, real estate, credit, and, through its strategic partners, hedge funds” (Wikipedia). And now it knows all about animal health? Naa, it’s all money. See May and August 2018 and April 2019 for other consents involving KKR – and next month, for a pet food company.

Taiwanese Orient Europharma Buys A Dairy Farm For Goats In Taupiri, Waikato

Orient Europharma (NZ) Co Ltd (Taiwan 92.8%; various 7.2%) has consent to acquire 118.8263 ha. at 847 Lake Road, RD1, Taupiri, from Croasdale Farms Ltd (NZ 100%) for $9.5 million. The OIO states that Orient Europharma has a dairy goat farm and is a member of a dairy goat cooperative that processes, manufactures, and sells dairy goat milk products. It is wholly-owned by a Taiwan-listed transnational pharmaceutical company.

It intends to convert the land from dairy cows to goats to produce goats’ milk which will be supplied to the cooperative for manufacture into products predominantly exported to Asia. It intends to invest approximately $3.5 million over three years including expenditure on infrastructure and buildings. This is likely to create five new fulltime equivalent jobs on the farm, increase volume and processing of primary products, and increase export receipts.

The applicant’s ultimate owner (not on its NZ company registration) is OEP Group, founded in 1982, listed in 2003. Its stated competencies include pharmaceutical innovation, R&D, manufacturing, sales and clinical trials, with vertical integration to increase operational efficiency. In 2019 it had over 1,000 employees, 40% of them outside Taiwan, and a turnover of around $NZ300 million.

It has subsidiaries in Singapore, Malaysia, Hong Kong, Philippines, China and is cultivating the Asia-Pacific market. It does prescription medicines and technologies, healthcare supplements and baby care, including its Karihome brand of NZ goat milk powder and tablets “providing complete nutrician [sic] for pregnant and nursing mothers” and pre-schoolers.

Karihome is an international brand shared by Orient EuroPharma (OEP) and the 71-member Dairy Goat Cooperative (DGC), said to be inspired by NZ’s Karitane nursing service. I can’t find any previous OIO consent in the name of Orient Europharma or OEP or Karihome or DGC.

Warburg Pincus Private Equity Shuffles Its Share Of James Fletcher Drive,Ōtāhuhu Development

Alexandrite Athena Group Co. Ltd (nationality of ownership withheld under s.9(2)(b((ii) of the Official Information Act 1982) has consent to acquire a 3% freehold interest in 17.1495 ha. at James Fletcher Drive and Savill Drive, Ōtāhuhu, Auckland, from Warburg Pincus Private Equity XII, LP, Warburg Pincus Private Equity XIIB, LP, Warburg Pincus Private Equity XII-D, LP, Warburg Pincus Private Equity XII-E, LP, WP XII Partners, LP, Warburg Pincus XII Partners, LP, Warburg Pincus China, L.P. and Warburg Pincus China Partners, LP (nationalities of vendor also withheld). Price $1.

The OIO states that Warburg Pincus Group manages a number of US-based investment funds, which are widely held. The Group is adding another two tiers of holding companies (including Alexandrite Athena) into the middle tiers of its structure. There will be no change of control and only minor changes in beneficial ownership of shares due to the transaction. The Group’s link to New Zealand is remote. One of the subsidiary companies downstream of the transaction owns a 3% freehold interest in 17.1495 ha. at James Fletcher Drive, Auckland. The land is sensitive due to proximity to the Manukau Harbour.

The OIO determined that the transaction was of benefit to New Zealand and noted that refusing consent to the transaction would likely adversely impact New Zealand’s investment reputation. This transaction is captured by s.20A of the Act because State-associated pension funds from Hong Kong and the US have minor ownership stakes in funds managed by the Group. The Minister of Finance has determined that this transaction is not contrary to New Zealand’s national interest.

Here’s new – suddenly the NZ public isn’t allowed to know even the nationality of new investors? Yes, of course their links to NZ are remote – they’re overseas investor funds! If there is little change in beneficial ownership, then the bit they are avoiding telling us is where – or in which tax havens – those investors now purport to be. Adding tiers to corporate towers may be used to insulate beneficiaries from legal or tax legal responsibilities, or other corporate inconveniences. Chapman Tripp are the advising NZ lawyers – just thought I’d name-drop them.

The 17.1495 ha. in Ōtāhuhu is the development for which a financial vehicle organised by LOGOS received OIO consent in August 2020. No mention of Warburg Pincus or its 3% ownership (or nationalities). Warburg Pincus is a New York-based private equity firm with offices in the US, Europe, Brazil, China, Southeast Asia and India, with currently approximately $US62 billion in assets under management.

It’s so large and long established that Wikipedia offers us an entire History of Private Equity and Venture Capital on the same page. So big they don’t have to provide the same public information as everyone else, apparently. Warburg Pincus had a piece of Waste Management NZ from March 2009 until 2014 when it was bought by China (see our commentary of June 2008), and the Warburg family had an interest in a couple of leasehold buildings in the Auckland CBD (see OIO consent of June 2007 for HIH Global Invest GmbH).

Singapore Government Gets 50% Of ANZ Centre, Auckland

Reco Augustine Private Ltd(Singapore 100%) has consent to acquire significant business assets, being a 50% share in the ANZ Centre 23 Albert Street, Auckland from Precinct Properties Holdings Ltd (NZ 49.7%; various 25.2%; UAE 17.3%; USA 4.9%; Australia 2.9%) for $177,000,000. The OIO states that Reco Augustine is a Singaporean company ultimately owned by a sovereign wealth fund established by the Government of Singapore. This fund is involved in long term investment in commercial properties in NZ. It will be this applicant’s first investment in NZ. The Minister of Finance has determined that the Investment is not contrary to NZ’s national interest.

T&G Global/ENZA Fruit Leases Hawkes Bay Orchard To Plant More Apples

T&G Global Ltd (Germany 74%; China PR 20%; NZ 5.9%; various overseas 0.05%) has consent to lease approximately 11 ha. at 70 Franklin Rd, Pakowhai, Hawkes Bay, from Peter Anthony Scott and Karen Marrianne Scott (NZ 100%). Price withheld. The OIO states that T&G Global is a grower, distributor, marketer and exporter of fresh produce including apples.

It intends its 100% subsidiary ENZA Fruit NZ International Ltd to lease the land. The land is currently planted in older varieties of apples with areas of bare land and the Applicant intends to plant and grow high value Envy apples using the 2D planting system. The OIO is satisfied this is likely to result in substantial and identifiable benefit to NZ, through increased jobs, export receipts, capital expenditure, royalties paid, and increased productivity and efficiency. The applicant has demonstrated benefit to NZ through previous investments.

T&G Global (originally Turners & Growers) has had a series of consents to lease land, mainly for apples – see our commentary for March 2020. ENZA Fruit is T&G’s fruit processing business, which it tried to offload in 2017, considering it “non-core” (Rural News, 16/10/17).