OVERSEAS INVESTMENT OFFICE DECISIONS
October 2021 To January 2022: The Condensed Edition
- Murray Horton
The situation remains unchanged from that which I reported in the December 2021 Watchdog - namely that, despite a year of looking, we have been unable to secure someone new to write up the Overseas Investment Office's monthly Decisions. We have joined volunteering networks in both Christchurch and Wellington in order to avail ourselves of their services. We have received several inquiries from interested people, the great majority of whom were never heard from again once they realised what a specialist job it is and how much work is involved.
A handful took up our invitation to write up one month's worth of Decisions as a trial. One person (and one only) actually did so. I read it and returned it to that person, pointing out where improvements needed to be made - most importantly, that we expect critical analysis and understanding of the issue, not just reportage. We never heard from that person again.
We direct you to the Overseas Investment Office's Website, where you can find all the Decisions archived. These are summaries only, not the full files. As a purely token gesture, CAFCA has decided to highlight one Decision from each month of Decisions.
Undermining Waihi
This is simply the latest step in the decades-long literal undermining of Waihi and the Coromandel by transnational mining companies. OceanaGold (New Zealand) Limited, United States of America (42%), United Kingdom (25%), Canada (11%), Australia (8%) and Various (14%) has been given permission by the Minister for Land Information and the Minister of Finance to buy land in Waihi. Both the seller and the amount paid have been withheld.
To quote the OIO: "The Applicant is a New Zealand-incorporated gold mining company, with operations in Otago, Reefton, and Waihi. The Applicant is part of OceanaGold Corporation (OGC), a multinational gold mining company with operations in the Philippines, New Zealand, and the United States of America.... The Applicant sought consent to acquire land at Waihi (the Land). The Applicant intends on building a portal on the Land to the Wharekirauponga Tunnel (WKP Tunnel)".
"The Land will also hold surface infrastructures to facilitate the construction and maintenance of the WKP Tunnel. The Applicant intends to also construct a single tunnel with a portal on the Land to their existing Waihi processing plant, linking to the WKP Tunnel". This Decision also allows readers to give their Latin a workout. "The Crown will have the opportunity to acquire the usque ad medium filum aquae rights associated with a stream which adjoins the Land". It means rights which extend to the middle line of the water.
OceanaGold has a shocking record in Waihi and Coromandel in general (as did its' transnational predecessor, Newmont). Catherine Delahunty, Chairperson of Coromandel Watchdog of Hauraki, wrote in Watchdog 157 (August 2021, "The Undermining Of Hauraki 2021"):
"In Hauraki, the gold company OceanaGold is continuing its long-term effort to scrape every last ounce of gold out of Waihi and then move on to the coastal areas and the conservation lands of the south east Hauraki (Coromandel Peninsula) area. It is aggressively pursuing new consents for further underground mining and a new pit in Waihi town. This involves widening the Martha Pit - which is actually the remnant of the sacred maunga Pukewa".
"The pit has a huge slip on the north face but there is gold within and below. Therefore, parts of the town of Waihi are being reclassified as a mineral zone and the historic Waihi Pump House and main street will be impacted from the extended Martha Pit. This means a return to dust, noise, vibration and blasting in the heart of this town which is yet to reap the rewards of nearly 40 years of extractive industry. It also has a massive toxic waste dump complex on the edge of town and this is also about to be expanded".
"Coromandel Watchdog of Hauraki has tried to support some of the campaigns by Waihi residents to fight the worse impacts of mining, both because it's creating a huge toxic legacy and risk, and because we know that companies like OceanaGold plan to use Waihi as a base for expansion into the rest of the region. ... The arguments against extracting gold from the earth only grow stronger as climate chaos grows and food producing land and clean water are ever more precious. You might think the ban on open cast mining on the Coromandel Peninsula which we achieved in the 1990s had solved our local issues and that Waihi is just a sad anomaly in a beautiful landscape".
"Unfortunately, the open cast ban has only led to a new strategy by the mining industry. The plan now is to tunnel under the mountains and ranges and blast out the gold. This might sound like an improvement but as people living with underground mining in Waihi can attest, it is actually and literally very disturbing".
"The first targets for this brave new undermining, are the conservation forests behind Whangamata, the Wharekirauponga lands. This area is the home of one of the rarest and most endangered frogs in the world, the ancient species of pepeketua (Archey's frog). No one can guarantee that blasting under their habitat, polluting underground water supply with heavy metals and changing the water table through dewatering the mine tunnels, will have minor effects. No one can guarantee that Whangamata will not lose its future access to clean water let alone guarantee that the sensitive frogs will reproduce in a human-induced earthquake zone".
"So, yet again, we prepare for a campaign to stop this mine and also the precedents it creates for the rest of Hauraki. We cannot afford to allow OceanaGold to expand into the lower Peninsula because the more they explore the coasts and further north, the harder it will be to stop another bonanza. The very serious news (as the gold price reaches global highs) is that Wharekirauponga has been drilled and the gold concentrations found are much higher than even under Waihi. We have to draw the next line and stop underground mining on conservation land".
Labour's Rubber Stamp
Linda Hill wrote up OceanaGold in (or, rather, under) Waihi in the October 2020 Decisions, under the heading "Labour Gives OceanaGold A Rubber Stamp For Waihi". She wrote, quoting the OIO: "OceanaGold (New Zealand) Ltd (USA 42%; UK 25%; Canada 11%; Australia 8%; various 14%), has a standing consent to acquire residential (but not otherwise sensitive) land for incidental residential use and non-residential use. The OIO states that OceanaGold applied for this standing consent to acquire residential land related to its mining operations in Waihi".
"It is ultimately owned by OceanaGold Corporation, a transnational gold, silver, and copper mining company headquartered in Melbourne and listed on the Toronto and Australian stock exchanges. It operates two major mining developments in NZ: the Waihi gold mines and Macraes gold mines in Otago. OceanaGold acquired the Waihi Mines in 2015 and has plans to extend its life to 2036, and submits that the purchase of residential properties for various purposes is vital to the viability of the mine".
"OceanaGold plans to acquire residential land related to its mining activities in Waihi, due to the need to comply with conditions of its resource consents. OceanaGold expects that most of those properties will remain suitable for residential use until mining commences and/or while mining takes place. OceanaGold also expects to purchase residential land for physical mining works (including pit expansion or relocating roads), and for use as buffer land from the effects of physical mining works. This standing consent is for up to 15 transactions by 31 October 2023, for a total of 75 ha. of residential but not otherwise sensitive land within the territory of the Hauraki District Council".
"See May 2019 and January 2020 for recent OceanaGold purchases of residential land for waste ponds or tunnelling under associated with the expansion of the Martha Mine. In May 2019 Labour's Ministers side-stepped Green Minister Eugenie Sage when she declined OIO consent in regard to a waste pond she considered an environmental risk. Now she is no longer Minister for Land Information, it appears Labour will let OceanaGold have whatever land it wants without Ministerial oversight".
"On 24 July 2020 OceanaGold announced Project Quattro, comprising:
- Phase 5 expansion of the existing Martha Open Pit.
- A new, smaller Gladstone Open Pit to the west of the processing plant.
- Increased tailings storage capacity immediately east of the current facilities.
- Raising the crest on TSF1A and investigating options that may include disposal within the Gladstone open pit.
- A new Northern Rock Stack storage facility to the north of current tailings".
"If consented, Project Quattro has the potential to produce nearly 750,000 ounces of gold over 14 years, extending the life of the Martha Mine to 2037. Search 'Waihi' in Coromandel Watchdog of Hauraki's Website for details, background and critique" and also here.
The full October 2021 Decisions are available here:
Ponga Silva Limited
Busy Bees NZ Bidco Ltd
MRCB Aotea Central Limited
Norsewood Estate Limited
Trivium Madison Pacific Investment Limited
Labels Buyer, LLC
Evolution Rehab Limited
Intersnack International B.V.
Warner Brothers International Television Production New Zealand Limited
Buy Now, Pay Later Debt Trap
Physical credit cards are on the way out (going the way of cheques, with cash following closely behind). Apparently, the way to make purchases now is via buy now pay later (BNPL), which used to be called lay by or hire purchase in the good old days. This is the weaponised electronic version. And the principal practitioner of it in Australasia is Afterpay.
Lanai (AU) 2 Pty Ltd, United States of America (64.24%), Various (29.01%) Japan (2.51%), United Kingdom (2.27%), and Germany (1.97%) is buying 100% of the shares of Afterpay NZ Ltd. This is part of a global buy out of Afterpay for $NZ41 billion. To quote the OIO: "The Applicant is a subsidiary of American company Square, Inc.".
"The Applicant is acquiring 100% of the shares in the Australian company Afterpay Limited by scheme of arrangement under Part 5.1 of the Corporations Act (Australia). Under the scheme of arrangement, Afterpay Limited shareholders will be given shares in Square, Inc in exchange for their Afterpay Limited shares. The transaction will also have the result of Square, Inc acquiring the New Zealand subsidiary Afterpay NZ Limited".
"Afterpay Limited is a financial technology company which owns the intellectual property in a digital payment platform known as Afterpay. Merchants using Afterpay can make sales to their customers on a 'buy now pay later' basis. Afterpay NZ Limited operates the Afterpay platform in New Zealand. The acquisition of Afterpay Limited would allow Square, Inc to combine the parties' complementary businesses in order to accelerate their growth".
"Square itself was started by Twitter founder Jack Dorsey in 2009 to try and disrupt the payments industry. It too has found its business model (which revolves around providing consumers with more convenient ways of using credit and debit cards) increasingly disrupted by BNPL, which circumvents credit card providers altogether. After the acquisition, the merged Square/Afterpay will have a market capitalisation of over NZ$200b...".
"Not bad for a company that was founded barely seven years ago by young Aussies Nick Molnar and Anthony Eison, both of whom have agreed to stay on to lead Afterpay as a division of Square once the transaction closes" (Stuff, 3/8/21, Damian Funnell).
Afterpay is in the business of instant gratification and its target market are millennials. It conducts no credit checks and allows users to take goods home at the time of purchase and the purchase cost is spread over four interest-free payments. But, like anything bought on credit, BNPL schemes such as Afterpay can be a debt trap. "If the payments are charged to a credit card that is not paid in full each month, they'll attract a high level of interest. If any payments are missed, due to a credit card being maxed out or a debit card empty, significant late fees are applied".
"Peter Cordtz, head of community programmes at the Commission for Financial Capability, said the schemes could be a 'slippery slope' into debt for people who could not meet the payment schedules. 'On the face of it these systems seem like an easy way of spreading your payments because you're not getting stuck with fees and interest, but there's still risk', he said. 'You're still borrowing, and you'll catch penalties if you run past the agreed timeline for repayment'" (Stuff, 4/6/19, Susan Edmunds).
"Buy Now, Pay Later Lenders Are Not In Partnership With Ordinary People"
"They are in partnership with retailers. The more users spend, the more Afterpay earns. Afterpay boasts that its 'partners' see a 20% increase in sales, an average order value increase of 40%, as well as a stream of new customers.... Buy now, pay later lenders' focus is gendered, focused heavily on younger women, who prefer it to using credit card debt, which comes with annual fees, high interest rates, and debts that can hang around for years".
"But that old-fashioned plastic credit card brought only a free-floating temptation to spend money the holder didn't have. The Afterpay app is designed to keep people in a state of hyper-awareness of spending opportunities to pursue the imagined lifestyles of the pouting fashionistas of the in-app adverts.... Buy now, pay later is a form of debt" (Stuff, 14/1/22, Rob Stock).
The Afterpay debt trap is not hypothetical. "A mother has issued a timely warning about over-using Afterpay, having spent more than $A16,000 in just ten months by relying on the 'buy now, pay later' service. Afterpay allows customers to purchase an item and split the bill into four fortnightly instalments that are interest-free - provided you pay on time. The company makes about 15% of its revenue through late fees, with $A10 charged for payments not processed before the due date followed by a further $A7 if the sum remains unpaid a week afterwards".
"The service now has roughly 3.1 million customers in Australia and New Zealand combined, according to figures from savings.com.au and around ten million active users worldwide. But many fear it is a slippery slope to significant debt, especially in the lead up to the festive season. The average Australian household spends $A969 on Christmas presents and celebrations, figures from Finder reveal - yet 28% won't have enough savings to cover those costs".
"Instead, they rely on credit cards, loans or services like Afterpay to get through the 'silly season'; a risky approach that can rack up considerable repayments like the mother's $A16,000 revelation" (Daily Mail Australia, 1/12/20, Alice Murphy).
The full November 2021 Decisions are available here:
T&G Global LimitedGrand Equity Investment New Zealand Limited
Olam Food Ingredients New Zealand Limited
BCP V Modular Services Holdings IV Limited
Unity Software Inc and Unity Technologies SF
Domain Gardens Development Limited
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.
The full December 2021 Decisions are available here:
T&G Global Limited (x4)
576 GSR Development Limited
Mt Wellington Limited
Datagrid New Zealand Limited Partnership
Metlifecare Limited (x2)
ESR Cayman Limited
Parnell Park Development Limited
TKL & Family Pte Ltd
Drake Subsidiary Inc - a direct, wholly owned subsidiary of Discovery Inc. (the Applicant)
Wool Scours Go To 100% Foreign Ownership
Wool used to be the industry in New Zealand (I even played a modest part in it, spending several summers working in a long-gone Christchurch wool store). Not any more, the country hasn't been on the sheep's back for decades. Sheep numbers and wool prices have dipped precipitously, as farmers have plunged holus bolus into large scale dairy cattle farming - the largest land conversion in NZ's European history. Wool hardly rates a mention now, which is why I've chosen to highlight this one Decision.
Woolscour Holdings Limited Australia, (50%) New Zealand (50%) is buying the remaining 30% of the issued shares in New Zealand Wool Holdings Limited (the applicant already owns 70% of the issued shares). The vendors are Scouring Investments Limited, China (79.49%), Japan (13.29%) and Australia (6.59%). The price is withheld.
To quote the OIO: "The Applicant's sole business has been to hold shares in New Zealand Wool Holdings. The Applicant is 50% owned by TCP 1A Pty Ltd (part of the Australian investment firm, Tanarra Capital), and 50% owned by Ferrier Woolscours (a New Zealand company long involved in the wool scour industry)".
"The Applicant is increasing its shareholding in the Vendor's company from 70% to 100%. The Target is the parent company of the Woolworks wool scouring business. The business comprises New Zealand's three operational wool scours in Hawkes Bay and Canterbury. The scours operate as commission wool scours, scouring 75% of New Zealand's wool for local and export customers".
The Tanarra Group is headed by prominent Australian investment banker John Wylie. Tanarra Capital's Website says it has "$A2.3 billion in assets under management and individual mandates" and that it invests in "mid-market Australasian businesses". IBISWorld, in its "Wool Scouring In New Zealand Industry Outlook (2021-2026)" says: "The Wool Scouring industry is anticipated to perform modestly over the next five years. Chinese wool production is forecast to continue rising over the period, limiting demand growth from this key export market".
"Weaker growth in the domestic price of sheep meat compared to wool over the next five years is projected to encourage some sheep farmers to shift their focus towards wool production to achieve comparatively higher returns. This trend is likely to boost industry revenue. However, the quantity of domestically produced wool is expected to fall, negatively affecting the industry. Nevertheless, New Zealand's reputation for high-quality wool is projected to sustain export demand, assisting demand for scouring, carding and combing services".
The full January 2022 Decisions are available here:
CDL Land New Zealand Limited
Amazonia Bidco Holdings Limited
Faurecia Participations GmbH
Te Au (no 5) Limited
The first time that I wrote up the OIO Decisions (Watchdog 158, December 2021), I did not include a list of all of them for each month (May-September inclusive, 2021). So, here they are:
The full May 2021 Decisions are available here:
Pan Pac Forest Products Limited (x3)
Pointer Investment (NZ) Limited
Sunny Development New Zealand Limited
Essity Holding Company Australia Pty Ltd
IDEXX Laboratories Inc.
United Rentals Inc.
Te Au (No. 3) Limited
The full June 2021 Decisions are available here:
Kaingaroa Timberlands Partnership
Danfoss Power Solutions 11 Limited
The a2 Milk Company Limited
Fletcher Concrete and Infrastructure Limited
Adamantem Capital Management Pty Limited
Imola Acquisition Corporation
PISA Obligor Co 1 Pty Ltd
Ernslaw One Limited
Voyage Australia Pty Limited
Herens HoldCo AG
EverCommerce Solutions Inc.
Grand Equity Investment New Zealand Limited
Corisol New Zealand Limited
CK Amarillo LP
The full July 2021 Decisions are available here:
Lion New Zealand Limited
Organic Solutions Limited
Cambridge Homes NZ Limited & Vishal Agarwal and Jagadeesh Kunda
CDL Land New Zealand Limited
Ellis Campbell (NZ) Ltd
ORG International Holdings Limited
SG Fleet NZ Limited
Port Blakely Limited (x2)
Cerberus Vermögensverwaltung GmbH
Corisol New Zealand Limited
The full August 2021 Decisions are available here:
Targa Capital Limited
Fletcher Concrete and Infrastructure Limited (x2)
Metlifecare Limited
Ingka Investments Forest Assets NZ Limited and Ingka Investments Management NZ Limited
Fairfield TIR New Zealand Limited
KH Aggregator LP
Juken New Zealand Limited
Remutaka Forests Limited
SG Fleet New Zealand Limited and LeasePlan New Zealand Limited
NZ Logistics Holdings Limited
Grand Equity Investment New Zealand Limited
NZGT (UDC) Trustee Limited and UDC Finance Limited
The full September 2021 Decisions available here:
Horizon Flowers NZ Limited
Taieri Forests Limited
Summit Forests New Zealand Limited
A Limited Partner in Kauri Forests LP
Heritage Lifecare Limited
Te Au (No 4) Limited
Multi-Color (New Zealand) Holdings Pty Limited
Wankuan Li
SBI Regional Bank Holdings, Co., Limited
Affordable Kiwi Homes Ltd
Highlander 111 NZ Limited
ApexOne 7 Project Limited
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