CAFCA - Campaign Against Foreign Control of Aotearoa

Foreign investment in Aotearoa/New Zealand

Overseas Investment Office - February 2017 Decisions

Chinese Takeover Of Airwork Aviation Services

Zhejiang Rifa Holding Group Co., Ltd. (PR of China 100%) received consent to acquire significant business assets, being rights or interests in up to 100% of the issued share capital in Airwork Holdings Ltd by way of an initial takeover offer and any subsequent transactions within five years, at a cost that exceeds $100m, namely $203,478,070. The vendors are existing shareholders of Airwork Holdings (various New Zealand 99.83%, various overseas 0.17%).

Airwork Holdings is a specialist aviation service provider. Its key business involves helicopter and fixed-wing aircraft engineering and support services, including engine and component design, and maintenance, repair and overhaul. Zhejiang Rifa Holding Group’s core business in textile machinery, computer numeric control machinery and also owns a general aviation business, Air Xiya Aviation Co. Ltd.

Zhejiang Rifa Holdings will operate Airwork as part of its broader general aviation business, with a strategy of expanding and establishing a presence in the entire value chain, including landing base construction, equipment manufacturing, aircraft operation and maintenance, and personnel training. The transaction satisfied the s.18 criteria of the Overseas Investment Act 2005.

Airwork began operations out of Wellington in 1936 and grew to have operational bases in Auckland Heliport at Mechanics Bay and Auckland Airport as well as Wellington, Timaru, Queenstown, Christchurch, Brisbane and Perth Airports and in Papua New Guinea. It listed on the NZ Stock Exchange in December 2013, to raise up to $40 million for its next growth phase, with an offer of shares to New Zealand resident clients of brokers and to institutional investors. In 2015-16 Airwork purchased eight Boeing 737-400 passenger planes to convert to freighters to lease to customers in New Zealand and overseas, bringing its fixed wing fleet to 17 and its helicopter fleet to 38 (NZ Herald, 2/7/15).

Its profits rose 58% in the 2016 financial year to $24.6 million (NZ Herald 5/10/16). Zhejiang Rifa’s offer to shareholders depended on Chinese regulatory approvals, OIO consent and continuation of Airwork's aviation licenses. It went unconditional in mid-March 2017. Jie Wu, who founded Zhejiang Rifa Textile Machinery Co Ltd in 1993, Zhejiang Rifa Precision Machinery Co Ltd in 1999 and Zhejiang Rifa Holding Group in 2002, is now Board Chairman and CEO of Airwork.

As well as textiles machinery, computing and aviation machinery, Zhejiang Rifa Holdings was one of three corporations in a 2015 takeover of Australian ranch land roughly three-quarters the size of NZ (Bloomberg, 23/6/17), so it probably needs a few more planes. Zhejiang Rifa Holdings plans to grow Airwork in the Asia and Latin America markets (NBR, 14/3/17).

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Reesby Rotorua Buys Its Own Bus Station

Reesby Rotorua Ltd (UK 100%) has consent to purchase 0.6224 hectares of land at 146 Riri Street, Mangakakahi, Rotorua from Reesby Property Holdings Ltd (100%), for $1,130,000. Reesby Rotorua is a holding company for Sir Brian Souter, a long-established owner of commuter transport investments in New Zealand. It is currently leasing the land on which it operates its bus depot. It intends to continue using the land as a bus depot and to expand it as a hub for city to city operations of its related companies.

The transaction satisfied the s.16 criteria of the Overseas Investment Act 2005, with “benefit to New Zealand” criteria under s.17(2)(a)(iv) greater efficiency and enhanced domestic services, and Regulations 28(b) key person in a key industry and 28(e) Previous investments. Sir Brian Souter is the former owner of Stagecoach in NZ and the UK. See our commentaries of August 1998, September 2008, and December 2013 for other Souter bus and ferry ownership transactions in NZ and overseas.

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Australia/Singapore Equity Fund Buys Barker Companies Including Bluebridge

Apollo Bidco Ltd has consent to acquire 100% of the shares in each of:

  1. Strait Shipping Ltd;
  2. Ferry Lines Ltd;
  3. Straitsman Ltd;
  4. Freight Lines Ltd;
  5. Cartage & Storage Ltd; and
  6. Eagle Holdings Ltd,
the total value of their assets being valued at over $100m. The vendors are James Barker Family Trust (NZ 100%) and James Barker Shipping Trust (NZ 100%).

Apollo Bidco Ltd is a New Zealand incorporated company) wholly owned by certain investment funds managed and/or advised by CHAMP IV Management Pty Ltd, an Australian private equity fund manager. The OIO states that the targeted companies operate an integrated transport chain around the country, comprising road transport, shipping transport and freight forwarding businesses.

Apollo Bidco is a special purpose company incorporated in New Zealand for the purpose of making this acquisition. It is wholly owned by certain overseas investment funds managed and/or advised by CHAMP IV Management Pty Ltd, an Australian incorporated private equity fund manager. The overseas investment transaction has satisfied the criteria in section 18 of the Overseas Investment Act 2005

Unusually, this application does not give the nationality of the new shareholders. The Companies Office records that Apollo Bidco was listed on 9 November 2016 and changed its name to StraitNZ Ltd on 31 October 2017, with four Australian and one New Zealand directors. The ultimate owner is CHAMP IV Holdings Pte Ltd, registered in Singapore on 12 December 2016, its principal business being holding other companies.

CHAMP Private Equity has a Website and claims a "pioneering history" in Australian investment all the way back to 1987, that including StraitNZ. Stuff (31/3/17) reports that these companies were picked up after the death of James Barker in 2016 and includes Bluebridge ferries. See also commentaries of February 2015, October 2008, and February, October and November 2007 for other NZ acquisitions by CHAMP.

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Pacific Equity Partners Gobbles Up Food Partners Frozen Products

Australasian Foods Holdco Pty Ltd has consent to acquire significant business assets, being Australasian Food Holdco's acquisition of 100% of the issued share capital of Food Partners Ltd; and for Pacific Equity Partners Fund VLP, Pacific Equity Partners V-A LP, Pacific Equity Partners Fund V-B LP, Pacific Equity Partners V-C LP, Pacific Equity Partners Fund V Co-Investment Trust, Pacific Equity Partners Fund V (Australasia), PEP Investment Pty Limited, the holders of Class B shares in Australasian Foods, the holders of Class D shares in the applicant foods and management employees of any of the applicant's group of companies to acquire up to 100% of the shares in the Australasian Foods Holdco Pty Ltd

The vendor is Food Partners Ltd (NZ Public 100%). The price is $110 million. The OIO states that Australasian Foods Holdco Pty Ltd is wholly owned by certain overseas investment funds managed and/or advised by Pacific Equity Partners Pty Ltd (PEP), an Australian incorporated private equity fund manager, and PEP's affiliates. Food Partners is a New Zealand-based manufacturer of frozen convenience foods, including meatballs, burger patties, toppas, finger foods and meal solutions under the brands Leader, Tony's Tucka and Kauri Coast. The company is the major supplier to Subway in Australia and Asia for ready-to-eat protein products.

Australasian Foods is part of the Patties Group based in Australia. Patties are a large provider of frozen savoury and frozen dessert pies, with key products including meat pies, sausage rolls and fruit pies. Australasian Food Group was originally Peters Ice Cream (also Mövenpick), marketing through supermarkets, petrol stations, and convenience stores, as well as supplying direct.

Australasian Food Holdco registered a wholly-owned subsidiary Australasian Foods Topco NZ Ltd on 7 February 2017. See also commentary of June 2002 for Australasian Foods links to Fonterra. See Reuters (1/7/14), for the Australasian food rush. ().

For Pacific Equity Partners buying up other chunks of NZ business, see March 2016 (Global Academic Group); December 2011 (half of Purex, also a bit about PEP debt for Whitcoulls); February 2011, February and September 2008, March 2006 (Tegel, search later Tegel land acquisitions); October 2008 and May 2004 (Whitcoulls); July 2011, March 2009 and May 2007 (Veda debt collectors), November 2007 (Hoyts cinemas); January 2007 (Independent Liquor, sold September 2011 to Asahi [Japanese beer]); May 2006 (Griffins, sold to Universal Robina Corp, Philippines in October 2014); November 2004 (Guardian Healthcare, sold again in August 2005); August 2002 (a bit of Frucor, once Apple & Pear Board).

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T&G Global Leases More Hawkes Bay Land For Apollo Apples

T&G Global Ltd (Germany 73.9%; China PR 19.9%; NZ 5.9%; various overseas 0.1%) has consent to acquire a leasehold interest in 11.41 hectares of land at 304 Te Mata Mangateretere Road, Hastings, from David Hamilton Stewart, Helen Anne Stewart and Roger Peter Sinclair as trustees of the Stewart Family Trust (NZ 100%) for $814,993.

The OIO states that Apollo Apples (2014) Ltd, a 100% subsidiary of T&G Global Ltd, intends to acquire the leased land in Hawkes Bay to develop an orchard. The OIO is satisfied the investment is likely to create job opportunities, as well as increased export receipts and royalties for Plant and Food Research, a Crown Research Institute.

The transaction satisfied s.16 of the Overseas Investment Act 2005, with "substantial and identifiable benefit to New Zealand" with reference to s.17(2)(a)(i) - Jobs, s.17(2)(a)(iii) - Increased export receipts, s.17(2)(a)(iv) - Greater efficiency and productivity of the Overseas Investment Act 2005, and 28(a) - Consequential benefits, 28(e) - Previous investments, and 28(g) - Enhance the viability of other investments of the 2005 Regulations. Yet another T&G land acquisition for Apollo Apples orchards - $16,691,134 worth in December 2016 alone. See June, August and December 2017, February, July and December 2016 (five) and November 2014.

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Chinese Ownership Change At Good Health Products

Nanjing Sinolife United Co Ltd (Pinghu Gui, China, PR 53%; China Public 24.4%; various overseas 10%; Shanghai Fosun Capital Equity Investment Fund Partnership Enterprise, China PR 6.8%; Yanmei Wu, China PR 5.9%) has consent to acquire 40% of Shanghai Weiyi Investment & Management Limited Company which owns or controls a leasehold interest in 1.6917 hectares of land at 8 Parkhead Place, North Harbour, Auckland from Shanghai Fosun Weishi Tranche One Private Equity Partnership Ltd (China 100%) for $23,801,462.

The OIO states that Nanjing Sinolife United currently owns 60% of the shares in Shanghai Weiyi Investment & Management and intends to acquire a further 40% to become the sole shareholder. They intend to continue to run the business in New Zealand and to grow sales of GoodHealth Products Ltd's natural health products into the Chinese market.

The acquisition satisfied s. 16 and 18 of the Overseas Investment Act 2005, with "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 and productivity and s.17(2)(a)(vi) - Increased processing of primary products of the Overseas Investment Act 2005 and Regulations 28(a) - Consequential benefits, 28(e) - Previous Investments and 28(g) - Enhance the Viability of Other Overseas Investments.

Food Partners Ltd is seen by the applicant as complementary with the existing Patties business in Australia and will form an integral part of the Patties Group. Patties consider that there is the opportunity to leverage Patties' existing customer relationships and distribution networks to sell Food Partners Limited's products into Australia across several channels. The transaction has satisfied the criteria in s. 18 of the Overseas Investment Act 2005. See commentary of May 2015 for the acquisition of GoodHealth Products in which Nanjing Sinolife held 60%.

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Public Access Through Hunter Valley Station, Otago

Orange Lakes (NZ) Ltd (US 100%) has consent to acquire leasehold interests in 10,760 hectares at Hunter Valley Station, contained in a Crown Pastoral Lease and a Special Lease from Hunter Valley Station Ltd (Donald Mackenzie Cochrane, Penelope Lyall Cochrane, and Anthony Thomas McCleary as trustees of the Hunter Valley Trust, NZ 48%, Donald Mackenzie Cochrane, NZ 38%, Penelope Lyall Cochrane, NZ 15%). Price is $17.5 million.

Orange Lakes plans to continue a sheep and cattle farming operation on the land; its capital contributions will enable production to be significantly enhanced. It has demonstrated its willingness to facilitate public access to several important sites on or around the land. 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)(iv) greater efficiency or productivity, s.17(2)(a)(v) additional investment for development purposes, and s.17(2)(e) walking access, of the Overseas Investment Act and under Regulations 28(a) consequential benefits and 28(b) key person in a key industry.

Hunter Valley Station, between Lakes Wanaka and Hawea, with its 32km lake front is described as one of the most picturesque in the country. In March 2017, the mystery new owner was revealed to be US TV show host Matt Lauer and wife Annette. Lauer has hosted The Today Show, a travel series, Olympics opening and his interviews for NBC News since 1992 have included Presidential candidates Clinton and Trump. In 2016 Lauer bought a property in North Haven, New York from movie actor Richard Gere for $US36.5 million.

Stuff (2/3/17) reports that the rateable value of Hunter Valley Station is $13.5 million, and that years of wrangling between the Cochrane family lessees and recreationalists over access to parts of Lake Hawea Conservation Park via Meads Road from the State highway may be resolved by new conditions on the lease.

The new owner will be required to support and pay for any surveying and legal costs associated with the Council taking over the road, and the owner must pay for maintenance, clearing crossings and track damage (Stuff, “Locals Win Access Fight”, 2/3/17). Initially only two of the nine recommendations of the Walking Access Commission were included in conditions and legal action against Lauer was considered by Federated Mountain Clubs (NZ Herald 10/3/17).

On 7 April, however, the Commissioner of Crown Lands consented to the transfer of the lease. Orange Lakes has committed to invest in the farm operation, improve fencing and carry out pest control, maintain Hunter Valley road, remove High Burn Hut, and support the Epic Annual Cycling Race to take place on the land.

Orange Lakes has also committed to support improved public access (hunters, walkers, cyclists and horse riders) to Lake Hawea and the campsite at Kidds Bush, the Sawyer Burn Track and along a western access to Sentinel Peak.

The OIO didn't pursue Matt Lauer, the shamed US TV host, over this $13 million property deal after sexual harassment allegations in the US - which cost him his job (NZ Herald 8.6.18 ).

$13 million was the rateable value; on 4/4/19 Stuff revealed he in fact paid $17 million for it.

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Australian Buys Land in Queenstown

Timothy Andrew Roberts (Australia 100%) has consent to acquire 12.4 hectares at 704 Malaghan Road, Speargrass Flat, Queenstown, from the Queenstown Corporation Ltd for $4. million. The OIO states that Roberts intends to migrate to New Zealand and reside in New Zealand indefinitely, satisfying s. 16(1)(e)(i) of the Overseas Investment Act 2005

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Repercussions From February 2017 Decision

Paying Your Way On Waiheke

Keith and Alison Ross (Australia 100%) have consent to acquire approx. 2.4 hectares at 115 Nick Johnstone Drive, Waiheke Island from Nicholas Lindsay Scott Johnstone, Annette Mary Johnstone and Robin Winston Hargrave (trustees of the NLS & AM Johnstone Home Trust, 100% NZ). Price was $8 million. The land is being sold as a luxury residence featuring a large house, bush and bare, undeveloped land. The Rosses intends use the dwelling as a holiday home and will carry out an ecological development plan include planting and ongoing maintenance of indigenous plants, pest plant control, fencing and mammal pest control.

They will donate $NZ120,000 over eight years to the Royal Forest and Bird Society to fund works on the Atawhai-Whenua Reserve adjoining the land. They will also donate $NZ70,000 over seven years to the Westpac Rescue Helicopter service that provides medical services to residents of Waiheke Island. 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)(b) indigenous vegetation/fauna, and Regulations 28(a) consequential benefits and 28(f) advance significant Government policy or strategy.

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