Japanese Transnationals Increase Ownership Of NZ Forestry
The OIO has approved Mitsui & Co Ltd (Japan 70.15%, Various regions 29.85%) and Nomura Holdings Inc (Japan 68%; Various regions 31.9%) acquiring 77.02% of the shares in New Forests Pty Ltd which indirectly, through its subsidiary New Forests Asset Management Pty Limited, holds the controlling interests in a large forestry estate. The amount was $424,758,615.
The OIO explains: “Mitsui is one of the largest and most diversified trading, investment, and services enterprises in the world, with a global network spanning across 65 countries and regions. Nomura is a global financial services group with an integrated network spanning over 30 countries and regions. The Applicants are acquiring all of the existing shares in New Forests Pty Limited (New Forests) not already owned by Mitsui (which already owns 22.98% of New Forests)”.
“A subsidiary of New Forests, New Forests Assets Management Pty Limited, manages two investment funds that own a large forestry estate in New Zealand. The Applicants’ acquisition of New Forests is an overseas investment in sensitive land because of these management rights. New Forests also has a minority (less than 1%), investment in the investment funds managed by New Forests Asset Management Pty Limited”.
“Approximately 10% of New Forests’ share capital will be issued to New Forests’ staff participating in the New Forests Staff Equity Plan. This means that New Forests will be eventually owned 90% by Mitsui and Nomura and 10% by New Forests’ staff. This consent only permits a change in the ownership of the manager of the investment funds, and does not allow Mitsui, Nomura, New Forests, or the investment funds to make additional investments in sensitive land”.
New Forests is one of the big boys. In 2017 it was reported to have a $500 million war chest to buy up NZ forests. It started off buying plantations in Taupo, Wairarapa, Marlborough and Southland. In 2019 Radio NZ listed the country’s 50 biggest private landowners. New Forests came in at number 3. “New Forests Asset Management (77,465 hectares): New Forests is an Australia-based assets management company that operates several investment funds in New Zealand, owned by several subsidiaries”.
“It has amassed its forestry land portfolio in less than four years, starting with purchases in the Wairarapa in 2016. An Overseas Investment Office investigation into one subsidiary’s purchases resulted in a formal warning, an $80,000 charity donation and $20,000 in costs” (Stuff, 17/10/19).
“..The company was allowed to go ahead with an application to buy more land – which was ultimately approved – while some of its earlier purchases were still under investigation by the OIO” (Stuff, 7/10/19). See Linda Hill’s write ups of the February, September and October 2016 OIO Decisions for more New Forests consents to buy up NZ’s privatised forestry land in Wairarapa and Marlborough.
In her October 2016 write up, Linda wrote: “New Forests’ interest in New Zealand is made clear in their Investment Outlook 2015-2019: in 2014, New Zealand was the largest supplier of softwood logs to China, accounting for 32% of supply. Around half New Zealand’s forests remain in institutional (State/iwi) ownership, but foreign investment and management companies are increasingly targeting the New Zealand softwood forests in private hands. As New Forests tells clients, forestry is a stable long-term investment that grows – not just through export and processing profits, but biologically”.
In December 2022, the same month the OIO approved this acquisition, it was announced that “New Forests has launched a new fund targeting A$600m to invest across forest, land and agriculture markets in Australia and New Zealand… Among the investors is a Swedish pension fund believed to have invested with New Forests since its first fund was launched 12 years ago”.
“(It) said the latest fund was attracting strong interest from European investors drawn to positive sovereign risks and the outlook of the sector in Australia and New Zealand… ‘With our fourth fund, we want to buy agricultural land with the potential to put it into forestry. We will manage both agriculture and forestry as combined assets’” (IPE Real Assets, 2/12/22).
“Despite the low-value end uses, forest owners have been extracting strong returns. Nationwide, the industry’s pre-tax profit per worker was $361,000 in 2021, up from $167,700 in 2013, having peaked in 2018 at $553,400, according to analysis of the Annual Enterprise Survey by FIRST Union researcher Edward Miller. Foreign investors own 57% of New Zealand’s commercial forests” (New Zealand Listener, 18-24/3/23, “Cut & Run”, Rebecca Macfie).