CAFCA - Campaign Against Foreign Control of Aotearoa

Foreign investment in Aotearoa/New Zealand

Overseas Investment Office - December 2020 Decisions

Fletchers Residential Development At Riverhead, Auckland

The Minister for Land Information and the Associate Minister of Finance granted consent for Fletcher Residential Ltd (Australia 49.1%; NZ 19.9%; USA 15.8%; various 7.9%; UK 7.3%) to acquire 20 ha. in Riverhead, northwest of Auckland, comprising approximately seven ha. at Riverhead Road; approximately one ha. in another block at Riverhead Road; approximately eight ha. at Lathrope Road; and approximately four ha. in another block at Lathrope Road. Vendor (NZ 100%) and price withheld.

The OIO stated that Fletcher Residential Ltd develops residential land and builds new dwellings. It intends to rezone this land for urban use, given the fast-growing Auckland population and the features of the location. It proposes to subdivide and construct residential housing on the land, which is likely to occur between five and eight years sooner due to earlier rezoning. This is likely to advance more quickly the Government's goal of delivering more housing.

As one of NZ's largest home builders, Fletchers Residential has made a number of previous investments of benefit to New Zealand. Its NZX listing enables New Zealanders to participate in the investment. Fletcher Residential was given a 20-site OIO rubber stamp in April 2019, but this consent summary does not mention this consent, or the one granted in September 2020, as one of the 20.

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Huka Lodge Now Owned By US Private Equity Fund

The Minister for Land Information and the Associate Minister of Finance have granted consent for LLNZ Huka Lodge Ltd (USA 79.9%; China PR 7.5%; Bahamas, Cayman Islands and British Virgin Islands 7.5%; Jersey Island and Channel Islands 2.8%; Singapore 1.9%; Luxembourg 0.6%) to acquire approximately 6.7785 ha. at 271 Huka Falls Road, approximately 4.8562 ha. at 229 Huka Falls Road, approximately 0.0696 ha. at 16 Luberon Way, and approximately 0.2527 ha. at 295 Huka Falls Road, Taupo, from Worldwide Leisure Ltd (Belgium 100%), Alex van Heeren and Beattie Rickman Trustee Co. Ltd, as trustees of the Huka Trust NZ (Belgium 100%). Price withheld.

The OIO states that LLNZ Huka Lodge is a subsidiary of a US private equity fund which invests exclusively in travel and leisure investments. The Huka Lodge business is operated on the Land. The applicant intends to continue operation of Huka Lodge, expand the main lodge and develop new spa and gym facilities. The main benefits to New Zealand include the creation of approximately four new permanent full-time jobs and 25 temporary full-time jobs; an increase in export receipts due to the applicant's extensive and established distribution network; advancement of Tourism NZ's Premium Sector Strategy and the introduction into NZ of additional investment.

This OIO summary does not identify the US private equity fund that now owns Huka Lodge, but the NZ Companies Register lists the ultimate beneficiary as LLAUD Investment (UK) Ltd, which is a holding company registered in London in 2018 with a couple of US directors, Stephen Siegel and Coley James Brenan, who also direct other UK registered holdings and investment companies, including KSL Capital Partners.

NZ Herald (24/1/20) reported that a "bitter feud" and decades of litigation between businessmen Alexander van Heeren and Michael Kidd had led to Huka Lodge's acquisition by KSL Capital Partners, a Colorado-based investment company which specialises in hotels and resorts. Since it was formed in 2005, KSL has raised four private equity funds and two credit funds with approximately $US9 billion in equity commitments.

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Lane-Spollen Buys Land Suitable For Forestry Conversion

Te Au (No 2) Ltd (Singapore 100%) has consent to acquire approximately 317 ha. at 57 Tangoio Road, Hawkes Bay, from Beverley Coila Doohan, Michael Owen Doohan, Stephen John Doohan, Daniel Peter Doohan, Stephen Hugh Reaney and CDT (Doohan) Ltd (NZ 100%) for $3,258,500. The OIO states that the consent was granted under the special test for forestry activities under s.16A(4) of the Act.

The land is currently used as a sheep and beef farm. Te Au plans to subdivide and sell off the dwelling that is not required for forestry activities. Most of the land will be converted to forestry over approximately 245 ha. (predominantly radiata pine, but also some eucalyptus and redwood). The remainder will be unplanted land including roads and tracks (seven ha.) and retained native bush (11 ha.).

Planting will commence from the 2021 winter season, with radiata pine harvested in 25 to 30 years. Land Use Capability Classification (LUC) is a classification system of eight classes based on a broad assessment of the land's capability and versatility for different types of agricultural production given its physical limitations.

This land is a combination of LUC Class 6 (approximately 142 ha.) and Class 7 (approximately 139 ha.) which is generally considered more suitable for forestry. In addition, there is 37 ha. classified as Class 2, which is generally considered suitable for a broader range of land uses. Te Au is ex-oil man Hugh Lane Spollen who got two consents to buy forests in May 2019 and a third in July 2019.

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Immortality/Blackstone Ups Its Share Of Partners Life Insurance

Immortality Pte Ltd and Immortality ESC Ltd (USA 65.1%, various 23.9%; Cayman Islands 11%) has consent to acquire significant business assets being 15,618,696 liquidation preference shares of Partners Group Holdings Ltd (Singapore 49.8%; NZ 40.94%; Bermuda 5%; England 2%; various 2.3%) for $55,669,619. The OIO states that Partners Group Holdings operates the life insurance business Partners Life. Immortality currently has a 49.95% legal and beneficial ownership interest in PGH and this will bring its indirect ownership interest up to 54.71%.

Immortality is part of the Blackstone Group. Blackstone took a large minority shareholder of the Partners Group in 2016 for $200 million, enabled by changes to Partners Group's constitutions.

This followed Blackstone's purchase of five NZ retirement villages, see consent and commentary of June 2016. Partners Life was founded in New Zealand in 2010 by managers of two previous insurance start-ups which were sold on. In December 2020, Partners Life announced it was buying the BNZ Life insurance business from BNZ's Australian parent company, NAB, for $NZ290 million.

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Australian Investment Group Charter Hall Buys Half Share In BP Outlets

Bieson Pty Ltd as trustee of the CH Dartmouth NZ Investment Trust (Australia 64.8%; UK 6.9%; USA and Canada 11.4%; Europe 2.7%; Asia 4.6%; various 9.7%) has consent to acquire 49% of the units in the BASS NZ Head Trust and 49% of the shares in BASS NZ Management Pty Ltd in its capacity as trustee of the BASS Head Trust, from BP Oil NZ Ltd (USA 44%); UK 28%; EU 14%; Asia 5%; various 9%) for $261,660,000.

The OIO states that Bieson, the trustee of Australian unit trust CH Dartmouth NZ Investment Trust and subsidiary of the Australian investment group Charter Hall Ltd, was granted consent to acquire a 49% passive ownership interest in entities that own non-sensitive land currently owned by BP Oil NZ Ltd. The land consists of 70 service station sites across NZ operated by BP.

ASX-listed Charter Hall Group describes itself as an integrated property investment and funds management company, managing $40 billion in assets. This is a half share in BP's sell-and-lease-back arrangement involving the majority of BP's petrol and convenience outlets in NZ, with outlet leases averaging 20 years.

AMP Capital Invests In Serco Management Of Kohuora Men's Prison

AMP Capital Funds Management Ltd (Australian Public 85%; various 15%) has consent to acquire 40% of SecureFuture Wiri Holdings Ltd, including a leasehold interest in 20.1529 ha. at Wiri, South Auckland, from InfraRed Infrastructure (NZ) BV (Hong Kong Public 35.1%; UK Public 25.5%; Swiss Public 8.4%; Canadian Public 8.2%; South Korean Public 6.6%; Swedish Public 6.2%; various 10%) for $49.5 million.

The OIO states that AMP Capital Funds Management Applicant intends to acquire up to 40% of the company operating the Kohuora Auckland South Corrections Facility. The Prison is operated as a Public Private Partnership with the Department of Corrections. InfraRed helped construct the prison and now wishes to reinvest its funds elsewhere. AMP is a secondary investor who entered into the PPP at the management and oversight phase of the project.

The PPP requires the operating company to deliver operational services at the prison for a 25-year term, after which the responsibility (and the associated land lease) reverts to the Crown. Allowing AMP to enter into the investment as a secondary investor is likely to promote the Government's PPP strategy including secondary sell-down transactions. It is also considered likely to be in NZ's economic interest to have the PPP model working in a way that encourages additional investment. The applicant has been vetted by the Department of Corrections.

Kohuora men's prison opened in May 2015, built to house 960 prisoners. Following an inspection in August 2018, the Chief Ombudsman reported that high staff turnover (21%) was resulting in extended periods confined to cells, use of force, and poor record keeping, response to complaints and individual case management.

The report made 24 recommendations for improvements (NZ Herald 20/2/19). Hard to see how this change in Serco's investor arrangements will help resolve these problems, let alone make overseas-owned private prisons in our best interest. See also April 2020 for AMP increasing its holding of Wiri prison to 70%, and December 2019 for background on SERCO, the Wiri prison and AMP's involvement in prisons in Australia.

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PEP Private Equity Fund Buys Epsom Land For Medical Practice Extension

Evolution Auckland Property Ltd, owned by overseas investment funds managed and/or advised by Pacific Equity Partners Pty Ltd, an Australian incorporated private equity fund manager, PEP’s affiliates, and NZ-and Australia-based management shareholders, has consent to acquire approximately 0.0632 ha. at 24 Kipling Avenue, Epsom, Auckland, from Kipling House Ltd (NZ 100%) for $2,275,000.

The OIO states that Evolution Auckland Property is an NZ registered company wholly owned by Pacific Healthcare HoldCo Ltd. One of the businesses of the Pacific Healthcare HoldCo group of companies is private healthcare, including the provision of facilities and patient care. This consent allows Evolution to convert the existing two residential units on the land into medical consulting suites, which will adjoin an existing medical practice operating from Gillies Avenue. The conversion is expected to be completed by mid-2022.

Scoop (25/9/18) reported that Australian private equity firm Pacific Equity Partners bought a controlling stake in Australian private hospital operator Evolution Heathcare in late 2018. Evolution Healthcare had been invested in NZ for several years, helping take Acurity Health Group private in 2014 in a deal valuing the company at $112 million.

It later bought out its partners and sold the underlying hospital properties to Vital Healthcare Property Trust in a leaseback arrangement. Evolution Healthcare's Website lists its NZ businesses as Wakefield and Bowen Hospitals in Wellington, Royston Hospital in the Hawke's Bay and has a partnership in Grace Hospital, Tauranga with Southern Cross Healthcare. It has primary maternity centres in Parnell, Auckland and Huntly and specialist day hospital services at Endoscopy Auckland.

See March 2019 for Pacific Healthcare's acquisition of Evolution Healthcare and its private hospitals and rehab clinics in NZ. See November and December 2015 and October 2014 for Evolution's consents in regard to these hospitals. Search the CAFCA Website for the many and varied Pacific Equity Partners consents.

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