Overseas investment decision for case 200810054 - Follies Limited

The application has been approved as it met the criteria.

The Overseas Investment Office is satisfied that the individuals with control of the Applicant collectively have business experience and acumen relevant to the overseas investment, and that the Applicant has demonstrated financial commitment towards the overseas investment.

The Overseas Investment Office is further satisfied that each individual that exercises control over the Applicant is of good character and is not an individual of the kind referred to in section 7(1) of the Immigration Act 1987.

Background to the Investment:
TrustPower has identified an opportunity to develop a hydroelectric scheme in the Wairau Valley in the Marlborough region. The proposed scheme is an extension of the Branch hydroelectric scheme owned by TrustPower. Under the project, part of the Wairau river flow would be diverted into the existing Branch scheme and the water conveyed through interconnecting canals and penstocks to five new generating stations.

TrustPower has already entered into conditional easement option agreements with landowners of about 60 percent of the land required to be occupied under the project. TrustPower considers purchasing land only if negotiating an easement option fails or where a landowner actively seeks to sell the land.

Outline of the Investment: TrustPower proposes to acquire the subject property to enable it to proceed with construction of the project once resource consents are granted under the Resource Management Act. In particular, it is intended that the relevant land will be used to construct a portion of the canal, and associated access ways, for the proposed scheme.

Rationale for the Investment:
TrustPower's core business is to generate and sell electricity. TrustPower currently has a gap between the electricity it generates and the electricity it sells to consumers, meaning it is required to purchase electricity to sell to consumers leaving it vulnerable to price movements when hedges are not available. The proposed construction of the Wairau Valley scheme will assist in reducing TrustPower's potential exposure to electricity price rises.

The proposed overseas investment is or is likely to benefit New Zealand (or any part of it or group of New Zealanders) having regard to the following factors:

Overseas Investment Act 2005:
s17(2)(a)(i) - Creation/retention of jobs;
s17(2)(a)(iv) - Added market competition, greater efficiency or productivity, or enhanced domestic services;
s17(2)(a)(v) - Additional investment for development purposes;

Overseas Investment Regulations 2005:
r28(a) - Consequential benefits;
r28(c) - Adversely affect image, trade, or international relations;
r28(e) - Previous investments; and
r28(f) - Advance significant Government policy/strategy.