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Foreign investment in Aotearoa/New Zealand

Overseas Investment Office - November 2020 Decisions

NZ Super Fund, Ontario Teachers & Te Pūia Tāpapa Buy Back Our Pathology Services

NZ Healthcare Investments Ltd (Ontario Teachers' Pension Plan Board, Canada 50%; Guardians of NZ Superannuation 50%) have consent to acquire significant business assets, being 100% of the shares of APHG NZ Investments Ltd, from Healthscope Pathology Holdings No. 2 Pty Ltd, ultimately indirectly majority owned by Brookfield Asset Management Inc. for approximately $550 million. The OIO states that NZ Healthcare Investments was formed to acquire APHG NZ Investments which is NZ's largest pathology services provider. It intends supporting APHG staff to continue delivering the best possible pathology services to District Health Boards (DHBs) and patients.

This is the NZ Super Fund (and a Canadian super fund) buying back our pathology services – definitely a move in the national interest. Asia Pacific Healthcare Group (APHG) provides about 75% of NZ pathology services, serving 13 DHBs with more than 2,000 staff, 25 laboratories and 150 collection centres. It does a third of our Covid-19 testing. It is also a leading provider of veterinary pathology and analytical testing.

The vendor, Healthscope, is Australia's second largest and only national private healthcare operator, with 43 hospitals. APHG NZ Investments Ltd is the NZ registered bit of Healthscope. See our commentary of July and August 2010 for OIO consents for takeover bids for Healthscope by first Kohlberg Kravis Roberts, then (successfully) by Carlyle Group and TPG Capital. Then see April 2019 for a Brookfield private equity fund's takeover of Healthscope and ANZ Hospitals Topco.

The NZ Super Fund is one of the largest domestic investors in NZ's share market, with total holdings of approximately $1.8 billion. Its Website reports that it has key holdings of more than $100 million in Fisher & Paykel Healthcare, Spark, Auckland International Airport, Meridian Energy and a2 Milk Co. It has shares in, but is no longer a major shareholder of, Z Energy, having floated the company in 2013. Ontario Teachers' investment in APHG is through its Private Capital arm, which has significant experience investing in healthcare globally with investments in the diagnostics, healthcare services, medical devices and biopharma industries.

Ontario Teachers' has over $C204 billion in net assets and exists to invest and administer the pensions of the Canadian province of Ontario's 329,000 active and retired teachers (see News, 1/12/20). See February 2004, April and November 2007 for other OIO consents for Ontario Teachers' investments.

On 5 February 2021 the NZ Super Fund announced that Te Pūia Tāpapa (TPT), the Māori direct investment fund, has bought into Asia Pacific Healthcare Group with a 4% holding. TPT was established in 2018 by 28 Iwi and Māori entities to create intergenerational wealth consistent with te ao Māori values. The $115.5 million fund is available for co-investment in large-scale Aotearoa-based businesses and assets and is a preferred partner of NZ Super Fund.

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Drylandcarbon Buys Wairoa Land For Native Forest And Carbon Credits

Drylandcarbon One LP (NZ Public 59.3%; Australian Public 14.4%; US Public 14.1%; various 12.2%) has consent to acquire approximately 1,594.5 ha. at 2775 Mangapoike Road, Wairoa, from Craigmore (Te Puna) Ltd (UK Public 59.4%; Asian/Pacific Public 17.4%; European Public 15.1%; NZ 6.6%; various overseas 1.5%) for $5,290,000.

The OIO states that Drylandcarbon One is a limited partnership developing a diverse forestry portfolio which plans to acquire sufficient land to plant 20 million trees in the next five years. It intends to plant up to 1,065 ha. in permanent forest to generate carbon credits for the NZ Emissions Trading Scheme. This land is currently run as a sheep and beef cattle farm, with small plantings of radiata pine and manuka; however, it is erosion prone and is better suited to forestry.

Drylandcarbon will retain the 80 ha. of manuka plantation and will allow at least 271 ha. to regenerate as indigenous vegetation and forest cover. It intends this to align with the Government's climate change policy and One Billion Trees strategy. Drylandcarbon has a significant NZ ownership including the Crown and the NZ public through shareholdings in the limited partners Air New Zealand, Z Energy, Contact Energy and Genesis Energy. See previous OIO consents for Drylandcarbon in November 2019, January, February (2) and May 2020.

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New Forests Gets Three Consents To Buy Forests In Wairarapa & Marlborough

Both Norsewood Estate Ltd and Marberry Estate Ltd are owned by ANZFF3 Ltd, which is wholly owned by ANZFOF3 NZ Pty Ltd, ultimately owned by The Trust Company (Australia) Ltd as trustee for the New Forests Australia NZ Forest Operating Fund 3, which is wholly owned by certain overseas investment funds. New Forests Australia NZ Forest Operating Fund 3 is managed by New Forests Asset Management Pty Ltd.

All three applications were made under the special test for forestry activities under s.16A(4) of the Act. The Minister of Finance determined that all three investments were not contrary to NZs national interest. Norsewood Estate Ltd has consent to acquire approximately 1,932.6970 ha. at 357 Summer Hill Road, Hinakura, Masterton/Rocky Hill Road, Te Wharau, Southern Wairarapa. The vendor is Wairakei Pastoral Ltd (NZ 100%); price withheld.

The OIO states that the land is already a commercial forest known as the Rocky Hills Forest, of which 739.2 ha. is currently planted in exotic tree crops. An additional 227.1 ha. of planting is expected to be undertaken by Wairakei Pastoral, bringing the total to 966.3 ha. Norwood Estate intends to plant a further 290.3 ha. currently used for grazing in pinus radiata.

The remaining 676.2 ha. is non-productive land of reverting bush and scrub or related to unplantable areas, riparian boundaries or infrastructure. Norsewood intends to continue to operate the land as a commercial forest, and replant trees following harvest. It will continue existing arrangements, including public walking access to the Rocky Hills Sanctuary Area.

Norsewood Estate Ltd has consent to acquire approximately 231 ha. and a forestry right over approximately 228 ha. at Rocky Hill Road, Te Wharau, Southern Wairarapa, from Ben William Priestley, Natalie Jane Atkinson and Opunake Honey Trustee Ltd (NZ 100%) and Craigmore Forestry 1 Ltd (Switzerland 93%; Germany 7%). Price withheld.

The OIO states that the land is already used for commercial forestry and known as the Summerhill Forest Estate. Norsewood is buying a freehold interest and a forestry right which exists over the land and a small portion over the neighbouring Rocky Hills Forest. 157.4 ha. of the freehold land is already planted in exotic trees, and Norsewood intends to plant an additional 14 ha. in Pinus radiata.

The remainder is 55 ha. of native bush and scrub and 3.6 hectares of unplantable land including roads and tracks. 16 hectares of the forestry right over the neighbouring Rocky Hills Forest is in exotic trees, with the remaining 11.6 hectares in native bush and scrub. Norsewood intends to continue operating the land as a commercial forest, and replant trees harvest.

Marberry Estate Ltd has consent to acquire approximately 663.9673 ha. land at Waihopai Valley Road, Waihopai, Marlborough, from Susan Jill Cambridge and Simon James Dorman and Susan Jill Cambridge (trustees of the Michael John Cambridge Children's Trust) jointly as Partners of the Cambridge Family Partnership (NZ 100%). Price withheld.

The OIO states that Marberry Estate applied under the special test for forestry activities under s.16A(4) of the Act. The land is already a commercial forest known as the Cambridge Forest. 581 ha. is in forestry, 71 ha. in native vegetation and 2 ha. of unproductive land is roads and tracks. Marberry Estate intends to continue operating the land as a commercial forest, and replant trees following harvest.

In October 2010, New Forests was listed as NZ's third largest private landowner. For the rapid recent acquisition of forests by New Forests equity funds, see also March 2020, May, June and three in November 2019, June 2018 (Otago); September 2018 (Wairarapa), May 2018 (Hawkes Bay); February 2016 (Wairarapa); September 2016 (Wairarapa, Southland) and October 2016 (Marlborough).

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Kauri Forestry Buys Land For Conversion In Waipu

Kauri Forestry LP (Switzerland 93%; Germany 7%) has consent to acquire approximately 624 ha. at 20 Boyd Rd, Waipu, from Caves Farm Ltd (NZ 100%) under the special test for forestry activities in s. 16A(4) of the Act. Price withheld. The OIO states that the land is currently in use as a beef farm. Kauri Forestry plans to convert most of it to forestry by establishing and maintaining plantation forest (predominantly radiata pine) over approximately 299 ha.

The remainder will be unplanted land associated with forestry areas, including roads and tracks (88.4 hectares) and retained in native bush (237 ha). It will be planted over the 2021 and 2022 winter planting seasons, with the radiata pine harvested in 25 to 30 years. Kauri Forestry is a Craigmore-organised overseas investment partnership. See previous consents in June, September and October 2019 and October 2020.

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Oji Fibre Buys Ngaruawahia Forest

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 approximately 1,123.8683 ha. at Te Puroa Road, Ngāruawāhia and forestry rights, from Dalian Economic and Technological Development Zone, Kaida Construction Engineering Co Ltd, Dalian Economic and Technology Zone Koushin Property Service Co. Ltd and Smith Road Farm Ltd (China PR 100%) for $7 million.

The OIO states that Oji Fibre applied under the special test for activities under s.16A(4) of the Act. The land is already a commercial forest known as the Ngāruawāhia Forest; 761 ha. is forestry, 115 ha. is native vegetation and 250 ha. is unplantable land. Oji Fibre intends to continue operating the land as a commercial forest, and replant trees following harvest. The Minister of Finance has determined that the investment is not contrary to NZ's national interest.

This consent does not indicate that it is one of Oji Fibre's standing consents granted in September 2020. Oji Fibre and its subsidiary Pan Pac are already among NZ's largest land owners and log exporters. Based in Tokyo, Japan, the Oji Group is the world's fifth largest pulp and paper company, with 158 consolidated subsidiaries located in 17 countries.

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Corisol Buys Forestry Land In Otago For More Conversion

Corisol NZ Ltd (Switzerland 100%) has consent to acquire approximately 489.365 hectares of land at 1949 George King Memorial Drive, Hindon, Otago, from Dochroyle Farming Ltd (NZ 100%) for $3,250,000. The OIO states that Corisol NZ applied under the special test for forestry activities under s.16A(4) of the Act. It is a subsidiary of a family-owned Swiss company that has previously invested in NZ and overseen forestry investments here since 2011. Currently the land is in a combination of forestry and sheep farming.

Approximately 185 ha. is subject to a forestry right granted to the Ministry for Primary Industries, which will continue. Corisol plans to develop the remainder into a commercial forest, planting the land by winter 2021, and replanting after harvest. The investment aligns with Corisol's broader plans to create an appropriately scaled forestry business. See October and November 2019 and June 2020 for previous Corisol consents. Corisol is a Swiss company investing in small and medium sized companies and real estate - and in NZ forestry. In October 2019 it was No.15 on RNZ's list of top 50 land owners.

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Ryman No Longer Considered An "Overseas Person"

Ryman Healthcare Ltd (NZ Public 61.9%; US Public 13%; Germany Public 6.6%; Australian Public 5%; UK Public 2.6%; Canadian Public 2.3%; Switzerland Public 1.1%; various overseas 7.5%) has consent to acquire 0.0283 ha. at 15A Cunliffe Road, Redwood, Christchurch, from James Morris as executor of the estate of Nancy Powell (NZ 100%) for $290,000.

The OIO states that Ryman Healthcare is a retirement village operator listed on the NZX. It is no longer an "overseas person" for the purpose of the Act; however, consent was required as this transaction was entered into prior to legislative change to the definition. Ryman was previously granted OIO consent to purchase land adjoining the land subject to this consent, on which it intends to develop an aged care facility and may use this land to extend the facility.

Ryman entered into the purchase agreement without first obtaining consent but has satisfied the OIO that this breach was inadvertent. The OIO considers that Rymans' previous investments have been of benefit to NZ, that it is substantially controlled by New Zealanders, and that purchase of this land may facilitate possible extension of the aged care facility. The OIO is satisfied that the investment will benefit New Zealand and satisfies the relevant residential land outcome.

The Overseas Investment Amendment Bill to make changes to the 2005 Act, including weakening the definition of "overseas person", has not been passed at the time of writing (February 2021), but a number of the proposed changes are already being applied under Regulations passed by Order-in-Council. Although one of the proposed changes is to make doing that more difficult.

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Administrative Penalty For Overlooking OIO Rules

Apex One Ltd (Wei Shen, China PR 70%; Guangjuan (Judy) Deng, NZ 30%) have consent to acquire approximately 0.0813 ha. 37 Erima Avenue, Point England, Auckland, from Erima Ave Development Ltd, for approximately $1,391,000. The OIO states that, to meet the increased housing test, the applicant proposes to remove the existing dwelling on the land and construct seven new residential dwellings. The OIO considers the investment is likely to meet one or more of the increased housing outcome requirements, the on-sale requirement, and the non-occupation outcome, which means the applicant and certain related persons must not occupy the land.

A retrospective consent was required as 70% of its shares are owned by an overseas person. Ms Deng, a New Zealander and a director and shareholder of Apex One, entered into the purchase agreement with an intention to nominate Apex One Ltd as the purchaser without making the agreement conditional on OIO consent. The applicant satisfied the OIO that the breach was inadvertent. On receiving legal advice that OIO consent was required, Ms Deng promptly contacted the OIO and postponed settlement; she has paid an administrative penalty. Did Ryman also get charged an administrative penalty for its inadvertent breach?

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Swager: NZ Lifestyle

Ronald Swager and Wendy Swager (USA 50%; USA/Australia 50%) have consent to acquire 193 ha at 919 Mangakuri Road, Elsthorpe, Hawkes Bay, from Angus Taylor Family Trust (NZ 100%) for $2 million. The applicants have satisfied the OIO that they intend to obtain NZ residency and reside in New Zealand indefinitely. Both were previously living in NZ, but Wendy returned to the US to sell their home and prepare for their move; she intended to return to NZ by the end of 2020.

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