CAFCA - Campaign Against Foreign Control of Aotearoa

Foreign investment in Aotearoa/New Zealand

Overseas Investment Office - December 2021 Decision

Buying Up Bus Companies

This month's one Decision was chosen to follow on from the one I highlighted in the August 2021 Decisions, namely the sale of Go Bus, from one foreign owner to another, a year after the original sale (see Watchdog 158, December 2021). This time the NZ bus company on the block was Ritchies. The OIO had to approve not only the sale of Ritchies the company but some residential land leased by it and used as bus depots.

Rome NZ Bidco Limited and Rome NZ Propco Limited, Canada (18.3%), United Arab Emirates (12.5%), People's Republic of China (12.5%), Luxembourg (10.5%), Singapore (6.5%) Germany (5.4%), Cayman Islands (5.3%), Hong Kong (5%), New Zealand (5%), United States of America (4.6%), South Korea (2.9%), Australia (2.5%), Kuwait (2.5%), Taiwan (2.5%), Malaysia (2.2%), Various (1.6%) are buying 100% of the shares of Ritchies Transport Holdings Limited and Coachline Properties Limited, who hold leasehold interests in the Land. The vendors are AJR Investments Limited and Beverley Hills Investments Limited, New Zealand (100%). The price paid is withheld.

To quote the OIO: "The Applicants are special purpose vehicles incorporated in New Zealand for the purposes of the Investment. They are ultimately majority owned by the widely held KKR Asia Pacific Infrastructure Investors SCSp and are affiliated with Kohlberg Kravis Roberts & Co. LP (together with its affiliates, KKR). KKR is a global investment company".

"The Targets operate a transportation business, offering bus and coach (including hire) services to schools, businesses, and the general public. The Applicants intend to continue operating the Targets as a transportation business. The Land, currently used as bus depots, will continue to be used as bus depots. The non-residential land use outcome will apply as the Land will be used for non-residential purposes in the ordinary course of the Applicant's business".

KKR: The Private Equity Behemoth

Ritchies runs public bus services throughout NZ. Its Website still boasts that it is "... a 100% New Zealand owned and operated company". No more. It now belongs to private equity behemoth KKR (Kohlberg Kravis Roberts), a giant investment company in the United States. So, when you buy a ticket on a Ritchies bus, that will join a global river of money flowing into the accounts of KKR's shareholders: the world's biggest banks, investment funds and rich individuals. KKR makes its money by re-engineering companies for profit, and selling them off. KKR is one of the world's biggest private equity funds. See Linda Hill's "Private Equity Funds: The Swirling Billions Of The 1% Reach NZ" in Watchdog 154 (August 2020).

"At the time of KKR's announcement that the firm was intending to buy Ritchies in August 2021, a statement said the investment marks KKR's first infrastructure investment in New Zealand. The purchase price has not been disclosed, but the Australian Financial Review estimated in March 2021 that Ritchies 'could be worth more than $NZ500 million based on similar deals in Australia and New Zealand'" (Stuff, 1/2/22, Matthew Littlewood).

KKR has been appearing in OIO Decisions for decades. We most recently wrote up an acquisition by it in the April 2021 Decisions. See May and August 2018, and April 2019 for other KKR acquisitions of significant NZ businesses.

In her write-up of the May 2018 Decisions, Linda Hill wrote: "With offices in 21 cities in 16 countries, it is currently headquartered in New York and listed on the NYX". See other commentaries involving KKR in October 2015, March 2013, July and August 2010, August 2007, October 1996 and July 1994; plus, a mention in Bill Rosenberg's article "International Pressures To Privatise", in Watchdog 117, April 2008. Also see, elsewhere in this issue: "From Private Equity To Public Ownership: The Case For Reform In The Bus Industry", by Edward Miller, Researcher and Policy Analyst at FIRST Union.

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