NZ Super Fund mulls Harvard's Kaingaroa forest stake
BUSINESSDESK: The New Zealand Superannuation Fund, set up to pre-fund the baby boomer generation pension liabilities, is in talks with Harvard University's endowment fund manager to take full ownership of the Kaingaroa forest estate.
The so-called Cullen Fund, named for its architect Michael Cullen, and global investment firm GMO Renewable Resources are in discussion with Harvard Management Company "over the possible purchase of Harvard's majority stake" in the forestry assets, the pension fund said.
The Harvard fund, with some $US32 billion of assets, owns 60% of the 170,000ha estate in the central North Island, with the NZ Super Fund holding the remainder, bought in 2006 for $300 million.
Kaingaroa is the super fund's biggest single investment, and part of its $1.26 billion timber investments, which include international woodland holdings.
The forest estate was singled out as one of the fund's best performing investments in the 2011 financial year, generating taking almost $3.5m in its share of profits.
The Harvard endowment portfolio made an 18.8% return on its natural resource portfolio in the financial year ended June 30, which included the cutting rights to Kaingaroa forests.
The overall portfolio returned 21.4% for the period.
Harvard’s fund holds about 10% of its assets in natural resources, which it says is mostly timberland and agricultural and other resource-bearing properties on five continents.
The natural resources portfolio has been built up during the last decade by Andy Wiltshire, a New Zealander who started his career with the NZ Forest Service, the developer of Kaingaroa.
Mr Wiltshire is head of external management for Harvard Management, the fund’s manager.
Harvard beat China's Citic to buy the Kaingaroa cutting rights from receivership in 2004. The price was not disclosed but it was believed to be near $US650m.
The same forest was sold by the Crown in 1996 for $2.2 billion.