Overseas investment decision for case 201410093 - Public Sector Pension Investment Board

An overseas investment in sensitive land, being the Applicant's acquisition of rights or interests in shares in Kaingaroa Timberlands Limited (“Shares”) which will result in the Applicant holding up to 95.917% of the Class A shares (up from 48.975%), 58.745% of the Class B shares (up from 29.995%), 29.995% of the Class C shares (as currently held) and 62.850% of the (newly created) Class D shares of Kaingaroa Timberlands Limited which (through its undivided 61.246% partnership interest in Kaingaroa Timberlands Partnership) owns or controls:

• a freehold interest in approximately 866.1875 hectares of land at State Highway 5 Te Haroto, Hawkes Bay; and
• a freehold interest in approximately 37.0630 hectares of land at State Highway 38, Murupara, Kaingaroa Plains, Bay of Plenty; and
• a leasehold interest in approximately 105.5300 hectares of land at Dun Road, Kaingaroa Village, Rotorua District; and
• a freehold interest in approximately 25.5774 hectares of land at Taharua Road, Kaingaroa Plains, Bay of Plenty; and
• a leasehold interest in approximately 79.6400 hectares of land at 1102 Te Ngae Road, State Highway 30, Rotorua District; and
• a freehold interest in approximately 266.3200 hectares of land at Pikowai Road, Matata, Bay of Plenty; and
• a freehold interest in approximately 542.3800 hectares of land at State Highway 5, Waiotapu, Rotorua District.

An overseas investment in significant business assets, being the Applicant's acquisition of the Shares and interests in loans to related companies of Kaingaroa Timberlands Limited, the consideration for which exceeds $100m.

The Applicant is currently a shareholder in Kaingaroa Timberlands Limited, a major investor in the Kaingaroa Timberlands forest.  It is proposed that the Applicant will acquire the interest in Kaingaroa Timberlands Limited ultimately held by the President and Fellows of Harvard College.  Guardians of New Zealand Superannuation, the Crown entity responsible for managing the New Zealand Superannuation Fund, which is the other major investor in the Kaingaroa Timberlands Forest, will increase its corporate governance of the Kaingaroa Timberlands Forest.

The overseas investment transaction has satisfied the criteria in sections 16 and 18 of the Overseas Investment Act 2005. The 'substantial and identifiable benefit to New Zealand' criteria were satisfied by particular reference to the following factors:

Overseas Investment Regulations 2005
28(a) – Consequential benefits
28(c) – Affect image, trade or international relations
28(e) – Previous investments
28(f) – Advance significant Government policy or strategy
28(j) – Oversight and participation by New Zealanders