Resources
Foreign investment in Aotearoa/New Zealand
Overseas Investment Office - August 2020 Decisions
Microsoft Cloud For Sensitive NZ Data Passes Minister's National Interest Test
Microsoft NZ Ltd and Microsoft 6399 NZ Ltd (US Public 60.3%; various overseas 31.8%; UK Public 5%; Canada Public 1.7%; Norway Public 1.1%) has consent to acquire significant business assets and non-sensitive land. The vendors are various unnamed data centre service providers and property owners with assets and land in NZ. The acquisition will exceed $100 million. The Minister of Finance has determined the investment is not contrary to the national interest.
The OIO states that Microsoft is a wholly owned indirect subsidiary of transnational computer hardware and software company Microsoft Corporation, a NASDAQ listed company with operations worldwide. This consent involves several pieces of land in Auckland for the purposes of establishing a data centre for cloud computing and networking equipment, storing and processing large amounts of data.
Microsoft intends improving its "hyperscale cloud services" by creating an on-shore data region which will allow NZ organisations and agencies to keep data (including sensitive data on New Zealanders) in NZ to comply with regulatory requirements. The proposed data centre was announced by the Prime Minister on 6 May 2020 (NZ Herald).
ITWire (7/10/20) reports that Microsoft can store data in New Zealand without it being subject to an onerous Australian "encryption backdoor" law passed in 2018. In July 2018 the Government announced a new Cloud, Software and Services Agreement with Microsoft which simplified previous arrangements by treating all Government agencies as a single customer, and provided a transition path to cloud and hybrid deployments.
Note that in November 2019 Inland Revenue released a Multinational Enterprises Compliance Focus 2019 report that touched on international discussions to ensure digital companies like Microsoft, Google, Apple etc. are paying a share of tax proportionate to the revenue in each of their customer countries.
Ministry Of Health Building Bought By Tax Haven Investors
WhangaHaumaru LP (limited partners, Switzerland 100%; general partner, Bermuda 100%) has consent to acquire significant business assets and 0.4838 ha. at 133 Molesworth Street, Wellington and an adjoining access way, from Molesworth CT Pty Ltd (Australia 94.8%; various 4.3%; NZ 0.9%). Price withheld.
The OIO states that WhangaHaumaru is a limited partnership vehicle registered in NZ for the purpose of this investment. The otherwise unnamed applicants have satisfied the OIO that the individuals who will control the investment have the relevant business experience and acumen and are of good character, and financial commitment has been demonstrated.
The NZ company registration on 4 June 2020 records no ultimate owner, just a couple of NZ directors in Nelson and Wellington. Whanga is harbour, haumaru is wind-sheltered or risk-free - in tax havens Bermuda and Switzerland. This large Wellington building houses the Ministry of Public Health, with rent paid by our taxes. So even if OIO officials aren't telling us, I do hope the Minister for Health and the Finance Minister responsible for the Overseas Investment Act know who these tax-avoiding cheeky bastards are!
Back to TopCloudy Bay/LVMH/Diageo Buy Another Vineyard
The Minister for Land Information and the Minister of Finance's delegate, Stuart Nash, gave consent for Cloudy Bay Vineyards Ltd (Diageo Plc, UK 34%; LVMH Moët Hennessy Louis Vuitton SA, France 66%) to acquire 9.5213 ha. at 164 Jacksons Road, Rapaura, from Barbara Mary Muir, Nathan Paul Muir and Wisheart Macnab & Partners Trustee Co. Ltd (Wishart Macnab and Partners Trustee Co. Ltd, NZ 33.4%; Nathan Paul Muir, NZ 33.3%, Barbara Mary Muir, NZ (33.3%). Price withheld.
The OIO states that Cloudy Bay Vineyards is an established New Zealand winemaker known for its sauvignon blanc wine, which is 78% of its output and 98% of which is exported. The land is currently 6.3 ha. in sauvignon blanc grapes and 1.3 ha. in pinot gris grapes. It plans to replant pinot gris grapes with sauvignon blanc and apply labour-intensive harvesting techniques. It states that Cloudy Bay's long track record of wine production and its existing global distribution networks will command a premium overseas, as compared to average New Zealand sauvignon blanc prices.
This application was called-in by Ministers, who considered that the benefit established in relation to the size and nature of the land was "substantial and identifiable". See May and July 2020 for other recent purchases by Cloudy Bay under this ownership, and comments on the consolidation of NZ wine and beer production into Big Global Alcohol.
Back to TopBarings Takes Over As Covid-19 Hits Travelex
Travelex Acquisitionco Ltd; Travelex Topco Ltd; and funds affiliated with Baring Asset Management Ltd, Baring International Investment Ltd and/or Barings (U.K.) Ltd (various public 55.3%; Irish Public 13.7%; Cayman Islands Public 13.3%; Luxembourg Public 9.1%; US Public 3.1%; Netherlands Public 3%; China Public 2.5%) has consent to acquire 100% of Travelex Financial Services NZ Ltd and the NZ branch of Travelex Card Services Ltd. The vendor is Travelex Ltd (Indian Public 65.7%; various public 34.3%). Price withheld.
The OIO states that Travelex Group is involved in foreign currency exchange, with kiosks at many international airports. This acquisition is part of a larger global investment by creditors of the Travelex Group which will allow certain operations of the Group to continue to trade. Travelex's business in international payments, foreign currency exchange, issuing prepaid credit cards for use by travellers and global remittances has been adversely affected by the Covid-19 pandemic.
Wikipedia reports that Barings is an international investment management firm owned by Massachusetts Mutual Life Insurance Co., and operates as a subsidiary of diversified financial services group MassMutual Financial. As of 31/12/19 Barings held over US$338 billion in assets under management.
It was once a merchant bank in London, founded on the wool trade in the late 1700s and continuing to the present day through booms, busts, wars, fraud, collapse, earthquake, more fraud, and bankruptcy, sale for $1, division and resale. See 1999 film "Rogue Trading" about Singapore trader Nick Leeson losing Barings £200 million while reporting a profit of £102 million to the British tax authorities. Barings survives in this MassMutual subsidiary now riding the fourth horseman, Disease.
Back to TopLOGOS To Build Logistics Centre For Toll In Onehunga, Auckland
James Fletcher Drive Asset Pty Ltd as trustee of the LOGOS James Fletcher Drive Asset Trust (Singapore 97%; various 2.1%; Canada 0.49%; Australia 0.4%) has consent to acquire 17.1495 ha. at James Fletcher Drive, Favona, Auckland, from Toll Networks (NZ) Ltd (Govt of Japan 100%) for $188 million. The OIO states that the applicant is in the industrial property business, and intends creating a high-quality industrial estate to be leased to industrial tenants. The stated likely benefits to NZ are:
- Direct and indirect jobs in construction and management of the industrial estate;
- Additional investment for development being introduced into New Zealand;
- Increased market competition in Auckland's prime industrial property market;
- Construction of spec-built warehouses with modern features to increase the tenant's operational efficiency.
The OIO also states that Reco Otago Private Ltd, one of the applicant's beneficial owners, has undertaken previous investment beneficial to NZ. See March 2015 consents in which the OIO stated that Reco Otago is part of the GIC Group, an organisation that invests the foreign reserves of, and is ultimately owned by, the Government of Singapore.
The applicant company is a financial vehicle organised by LOGOS. LOGOS's Website describes it as both an investment company and a company "specialising in property solutions for customers in the logistics sector" that "partners with leading brands in the Asia Pacific region". LOGOS' shareholders include ARA Asset Management, an Asia Pacific real assets fund manager with $Sg110 billion in gross assets under management; Ivanhoé Cambridge, a Canadian real estate industry investor with $C64 billion in assets globally; and LOGOS' founders.
LOGOS manages every aspect of logistics real estate, including investment management, sourcing land or facilities, development and asset management. It has over six million m2 of property owned and under development, with a completed value of $A13.8 billion across 21 ventures, including the Singapore-listed ARA LOGOS Logistics Trust. It describes the James Fletcher Drive site in Ōtāhuhu as a strategically unique rail and transport location with access to the Southern and South Western motorways and Metro Port. It will have a lettable area of 65,700 m2 and its major tenant will be the Toll Group.
In April 2019 LOGOS announced it was developing a $100 million-built meat processing facility at its new Wiri Logistics Estate in partnership with Hilton Foods, Auckland Council and land partner Fletchers Building. This would supply Countdown supermarkets (owned by Woolworths) from mid-2020. LOGOS was also completing a 45,000sqm purpose-built food processing and distribution facility for Hilton in Brisbane with the latest in automated food processing and packaging.
Back to TopUAE Capital Buys Two Holiday Camps In Waihi Beach And One In Papamoa
Tasman Tourism NZ Ltd (Al Sariya Third Commercial Investments RSC Ltd, UAE 90%; Tasman Capital Management Pty Ltd, Australia 10%) has consent to lease 2.3415 ha. at 15 Beach Road, Waihi Beach and 5.6693 ha. at 535 Papamoa Road, Papamoa, Bay of Plenty, from Waihi Beach Holiday Park Ltd and Papamoa Beach Resort Ltd (NZ 100%). Price withheld.
The OIO states that Tasman Tourism NZ is a joint venture between an Australian private equity firm with experience in the holiday park industry and an investment company based in Abu Dhabi. It is acquiring a portfolio of holiday parks in NZ. It intends to appoint a general manager and two management support staff to manage the holiday parks. A holiday third park, Beachaven at Waihi Beach, did not require OIO consent.
Despite the Covid-19 pandemic, Tasman Tourism remains committed and plans to introduce additional development capital of ($withheld), on facilities, maintenance and accommodation, split between the three parks. The stated likely flow-on effects are improved domestic services (through improved facilities), increased export receipts (through increased accommodation units), jobs in the construction of new facilities and units, and will advance the Government's tourist strategy.
The Waihi Beach Top 10 Holiday Park and Papamoa Resort were sold after decades in family ownership. The Al Sariya Group (established 1975) began as integrated services for infrastructural development in Qatar, then diversified as individual companies specialising in different areas of expertise. It invests in businesses in Qatar and worldwide by forming partnerships with local and international companies, in particular hospitality sector franchises.
Tasman Capital describes itself as a private equity firm specialising in lower mid-market private companies focused on management buyouts, turnarounds, active real estate, and buy-and-build transactions. NZ examples are its acquisition, then merger of HireQuip and Hirepool (see consents of September 2008 and July 2010), and Fleet Partners, an Australian and NZ vehicle fleet management business acquired from ANZ through a secondary buyout off Citigroup with GIC and Ironbridge, then floated on the ASX as Eclipx Ltd. See our commentary of February 2018 about Eclipx's securitisation of its NZ vehicle financing with the Guardian Trust (UDC Finance/Shinsei Bank have just done similar NZ vehicle loan securitisation, see July 2020).
Back to TopSingaporean Buys Zindia Timber Exports To India
Resources Investment Pte. Ltd (Anthony Intorn Kam, Singapore 100%) has consent to acquire 100% of the shares in Zindia Timber Assets Ltd which owns approximately 657.7734 ha. in the Marlborough Sounds, from Jacob Mani Mannothra (NZ 100%). Price: assumption of debt. The OIO states that this application was made under the special test for forestry in s.16A(4) of the Overseas Investment Act. Resources Investment is a Singaporean company recently incorporated to make the investment in Zindia. Following acquisition, Zindia's debt will be refinanced and the applicant will become the ultimate beneficial owner. The share sale was agreed in April 2020.
The land comprises parts of Arapawa and Queen Charlotte Forests Forests in the Marlborough Sounds. Approximately 522 ha. is pinus radiata of various ages. However, 73.5 hectares must be replanted. The remainder will be retained in native bush (110.7 ha.) and tracks and roading (25 ha.). Mr Kam intends to continue to use the land as a commercial forest and replant following harvest.
Zindia's Website describes itself as a "vertically integrated natural resources group" with 4,000 ha in forestry; Kam is now one of two Directors. It was founded 20+ years ago by Mannothra to export pine logs to India. See consents of October 2019 for Zindia's sale of a Port Underwood forest to NZ Forest Industries (owned by Issoria Offshore Ltd, Virgin Islands).
Back to TopThird Use Of Standing Consent By Fletcher Residential
Fletcher Residential Ltd (NZ Public 21.8%; Australian Public 54.4%; various overseas 23.8%) has consent to acquire approximately 0.4977 ha. at 349 College Road, Stonefields, Auckland, from Templeton Stonefields Ltd. Price withheld. The OIO states that Fletcher Residential was granted a standing consent based on the Increased Housing/Non-Residential Use tests on 18 April 2019.
This permits it up to 12 transactions by 1 May 2022; this is the third. It intends to subdivide and develop the land to construct a total of 28 new residential houses. Under the standing consent, it must increase the number of dwellings or supporting development works, and must divest all interests in the land within ten years.
Back to TopWoolworths Uses Its First Consent In Alexandra, Otago
General Distributors Ltd (Australian Public 99.4%; various 0.6%) has consent to acquire approximately 0.069 ha. at 57 Ventry Street, Alexandra, Otago, from Wayne Vince Tily and Susan Tily for $525,000. The OIO states that General Distributors (Woolworths) was granted a standing consent based on non-residential use on 13 November 2019 which permits it to acquire up to 75 ha. of sensitive land in ten transactions by 1 December 2022. This site, acquired on 6 December 2019, is the first use of the standing consent, and is for the construction of a new supermarket.
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