CAFCA - Campaign Against Foreign Control of Aotearoa

Foreign investment in Aotearoa/New Zealand

Overseas Investment Office - May 2020 Decisions

Centuria Capital Gets Augusta Capital Properties As Covid Bargain

Centuria Capital Group (Australian Public 73.3%; Singapore Public 13.8%; NZ Public 6%; US Public 3.6%; various overseas 3.4%) has consent to acquire 100% of the shares in Augusta Capital Ltd, which owns or controls 11 NZ properties that include sensitive land (total 23.4153 hectares). The vendors are existing shareholders of Augusta Capital Ltd (NZ Public 74.3%; Australian Public 19.4%; UK Public 3.6%; various overseas 2.7%). The price will exceed $100m.

The OIO states that Centuria Capital is an Australian specialist investment manager. It currently has a 22.9% interest in Augusta and seeks to acquire the remaining shares. Centuria considers its business to be complementary to that of Augusta as they both operate in the property fund management industry. The investment will provide benefit to NZ as Centuria will use its investment experience and stronger financial position to provide financial stability and accelerate the growth of Augusta as it recovers from the economic impacts of Covid-19. The investment will also result in - wait for it - one full time job.

This is really pretty inadequate consent information about a takeover by an Australian private equity firm fund of a NZ private equity firm at an undisclosed price and involving 11 undisclosed NZ properties. And Centuria is actually saying it is snapping up a Covid bargain, and considers that a benefit to NZ! The Minister's new discretion under the Overseas Investment (Urgent Measures) Amendment Act which came into force in June 2020 would not apply as land and property per se is not listed as "strategic". Although we can't tell anyway as the OIO has not provided the usual addresses.

NXZ-listed Augusta Capital manages properties valued at $2 billion. In March 2018 it was planning two new investment funds ($300m to $400m each) in residential and tourism property in Auckland and Queenstown, which it hoped eventually to list separately on the NZX. NZ Herald (29/11/18) reported that Augusta's profits had dropped in 2017 but funds management was proving more profitable than direct property ownership. In April 2020, the OIO gave Augusta consent for an issue of new shares to raise up to $45m for industrial development projects.

Centuria Capital Group describes itself as an ASX-listed specialist funds manager with $9.4 billion in assets under management (including Augusta). In January 2020 Centuria made a bid for Augusta, offering $2 a share. The Financial Review (29/1/20) reported that Centuria Capital was raising $80m fGGom investors to fund this acquisition, which would boost its assets under management by a quarter.

NZ Herald reported that the surprise takeover offer valued Augusta's issued equity at $180 million; Executive Directors Mark Francis and Bryce Barnett together own 23.3% of shares (29/1/20). Kalkine Media reports that, in March 2020 as share markets dipped under Covid, Centuria terminated its $2 bid - then renewed it at half the price: NZ$0.20 per Augusta share in cash plus $0.392 shares of Centuria Capital.

By early August this had been taken up by 90% of shareholders and the takeover went unconditional. Centuria's Website says this has increased its assets under management by 24%. See also commentary of June 2020 on OIO consent for Augusta/Centuria's development of Queenstown District Council land. And Rod Oram, RNZ, on 16.1.2020.

Jadestone Energy Gets 69% Of Maari Oil Field From OMV

Jadestone Energy (NZ) Ltd , (UK Public 77.9%; US Public 10.7%; European Public 6%; Canada Public 3.4%; various overseas 2%) has consent to acquire a 69% interest in the Maari petroleum mining permit (PMP 38160) and the Maari joint venture, together with associated operating contracts and other assets relating to the Maari joint venture. The vendor is OMV NZ Ltd (Österreichische Bundes und Industriebeteiligungen GmbH, Austria 31.5%; International Petroleum Investment Company, Saudi Arabia 24.9%; various institutional investors 16.6%; various overseas 9.45%; US Public 8.4%; UK Public 5.7%; European Public 3.5%). The price is NZ$77.3 million (US$50 million).

The OIO states merely that Jadestone Energy has satisfied the OIO that the individuals who will control the investment have the relevant business experience and acumen and are of good character, and it has demonstrated financial commitment. Maari is the oil and gas platform in the Taranaki basin straight out from Kapiti and Foxton, that OMV added seven horizontal hydraulic shafts to in 2014, with Environmental Protection Agency and other consents.

Jadestone Energy's Website says the project includes the Maari and Manaia oil fields, produced via a self-elevated jack-up wellhead platform and an FPSO (floating production storage and offloading unit) and owned by the joint venture partners Horizon Oil Limited (26%) and Cue Taranaki Pty Ltd (5%). The fields hold 2P reserves of 13.9 mm bbl. Completion of the acquisition will occur upon satisfaction of conditions, including acceptance of Jadestone as operator by the Maari joint venture partners, NZ government approvals relating to title transfer and change of operatorship and other customary conditions on or before 15 November 2020.

Jadestone anticipates completing the deal in the second half of 2020. Until then OMV New Zealand will continue as operator. Jadestone Energy describes itself as a leading upstream Asia-Pacific oil and gas company with a focus on production and near-term development assets. "Near term" means that, like the collapsed Tamarind company (see February 2019), it buys aging oil fields to suck out the last drops.

Jadestone is 100% owner of the producing Montara project offshore Australia, and is expecting to be granted operatorship. It also owns the producing Stag oilfield, as well as exploration and pre-development assets, in Vietnam and other parts of Southeast Asia. It is in negotiations for an interest in the Ogan Komering PSC, on-shore South Sumatra, Indonesia.

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Oji Fibre Buys Waihora Forest, Taupo

Oji Fibre Solutions (NZ) Ltd, (Japanese Public 86%; US Public 5.6%; UK Public 4.4%; various overseas 3.2%; Luxembourg Public 0.8%) has consent to acquire 272.6325 ha. at 272, 312 and 352 Hingarae Road, Tihoi, Taupo, from Waihora Forestry No.1 Ltd (NZ 96.5%, Australia 3.5%), %), Waihora Forestry No.1A Ltd, No.2 Ltd, No.3 Ltd (all NZ 100%), for $15.8 million.

The OIO states that Oji Fibre applied under the special test for forestry activities in s.16A(4) of the Overseas Investment Act. It has three mills in NZ, Kinleith, Tasman and Penrose, and is a major NZ manufacturer of craft pulps and packaging paper. The land is already a commercial forest with 269.7 ha. in forestry and 2.9 ha. of road and native vegetation. It is anticipated that harvesting will commence in approximately 2022. Oji Fibre intends to continue operating the land as commercial forest and replant following harvest.

In 2012 Tokyo-listed Oji Holding Corporation was the third largest company in the global forest, paper and packaging industry. It bought Carter Holt Harvey mills in 2014. In August 2007 it got consent for full ownership of Pan Pac Forest Products in Hawkes Bay, with more Hawkes Bay forests in October 2018, February, March and June 2019. In September 2019 Pan Pac got a standing consent for 25 forestry acquisitions. See consents for further forest acquisitions in February and June 2019. See also consents for forestry land under a former subsidiary name Southern Plantation Forests.

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Drylandcarbon To Plant 650 Ha Of New Forest In Taranaki

Drylandcarbon One Limited Partnership (NZ Public 65.7%; Australian Public 14.9%; US Public 12.3%; various 7.1%) has consent to acquire approximately 1,220.94 ha. at 1066 Autawa Road, Tarata, Inglewood, New Plymouth, from LW Nominees Ltd, David James Brocklehurst and Janette Margaret Brocklehurst, DJ & JM Brocklehurst Family Trust (NZ 100%). Price withheld.

The OIO states that Drylandcarbon applied under the special test for forestry in s. 16A(4) of the Act. It is a limited partnership established to develop a diverse forestry portfolio and plans to acquire sufficient land to plant 20 million trees in the next five years. It has a significant level of NZ ownership including Crown ownership and the public through shareholdings in the limited partners which include Air New Zealand, Z Energy, Contact Energy and Genesis Energy.

The land is part of a larger property currently used as grazing. The vendor will retain the more productive front part of the property while Drylandcarbon will acquire three titles at the back where it proposes to plant approximately 650 ha. as a commercial rotation forest. The balance of the land is reverting scrub and bush or riparian, a small existing exotic plantation (approximately 2 ha.) and infrastructure. Drylandcarbon intends to harvest the existing trees and replant. See November 2019, January 2020 and February 2020 (x2) for other Drylandcarbon forestry acquisitions.

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Constellation Selling Off Its Nobilo Wines To Gallo

E&J Gallo Winery (Gallo family, USA 100%) has consent to acquire significant business assets comprising the Nobilo wine brand and related assets from the NZ subsidiary of Constellation Brands (US 100%) for approximately $202m ($US130m). The OIO states that E&J Gallo Winery is the world's largest family-owned winery. Based in California, it owns over 100 brands and exports wine globally.

The business assets acquired comprise the Nobilo wine brand and associated intellectual property for worldwide use, all finished inventory (including bulk and bottled wine) and rights under grape supply agreements. E&J Gallo has satisfied the OIO that the individuals who will control the investment have the relevant business experience and acumen and are of good character, and has demonstrated financial commitment.

E&J Gallo is the largest exporter of California wines and world's largest family-owned wine company. In 2019 it did a $US1.7 billion deal to buy 30+ of Constellation's wine and spirits brands and six winemaking facilities in California, Washington and New York - with some asset shuffling to meet Federal Trade Commission monopoly rules. Constellation's NZ assets are now also on the table. Gallo was among the pioneers of sustainable wine growing practices in California, including long term supply contracts. Also pioneers of brand marketing, including wine ads on TV.

Constellation is a Fortune 500 wine, beer and spirits company. It is the US's third largest beer importer, and currently embroiled in a dispute in Mexicali involving water rights from the Colorado River. In NZ, it bought Nobilo Wines in 2003 (as well as BLR Hardy in Australia) and began buying up more land. See February and September 2005, February, April, May and August 2006, August 2007, January and July 2008 for consents under the Nobilo name; see September 2006, December 2013, January, May, April and October 2014 for consents under the Constellation name. See August 2019 for Constellation's sale of its Accolade Wines subsidiary and six vineyards to an Australian private equity fund.

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Brierley Sells Interest In America's Cup Marine Facility To Ariadne

Ariadne Australia Ltd (Australian Public 98.2%; NZ Public 1.6%; various overseas 0.2%) has consent to acquire 30% of the units in the Orams NZ Unit Trust, which owns 75.95% of the shares in Orams Group Ltd, which has leasehold interests in approximately 3.5515 ha. at Beaumont Street, Wynyard Quarter, Auckland. The vendor is Sir Ron Brierley (NZ 100%) and the price has yet to be determined.

The OIO states that Ariadne intends to increase its existing ownership of the Orams NZ Unit Trust from 50% to 80%. Orams Group Ltd is currently developing marine facilities at the Beaumont Street site. Ariadne has demonstrated that the acquisition will enhance the viability of the benefits anticipated in a previous consent by ensuring efficient development of the marine facilities ahead of America's Cup 2021. The OIO states that there will continue to be some control and partial ownership by New Zealanders, and Ariadne has demonstrated benefit to NZ in previous investments.

Stuff (8/2/19) reports that this development is a super-yacht facility aimed at the America's Cup 2021. It will have haul out and refit capability for vessels up to 800 tonnes. The commercial buildings include two mixed use buildings, two large work sheds and small ancillary sheds. One of Ariadne's directors is Gary Weiss, former right-hand man of Brierley. See June 2019 for Ariadne's previous consent, which was to lease additional Wynyard land from Auckland Council.

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