NZ Super Fund writes off investment in US wind turbine company Ogin

Chief investment officer Matt Whineray

The New Zealand Superannuation Fund has completely written off the value of its investment in US wind turbine company Ogin which is in the process of being wound down.

The Super Fund invested US$55 million in Massachusetts-based Ogin in 2013 to give the US start-up capital to develop new products before going public, of which US$25 million was debt and US$30 million was equity. Those plans didn't come to fruition and after Ogin failed to raise more capital last year, the Super Fund wrote down the investment to nil in June 2016, which had been valued at NZ$47.5 million. The debt portion was repaid in 2014 and the Super Fund injected a further US$3.8 million.

Ogin recently sold the wind turbine applications platform to Danish wind turbine maker Vestas, and the Super Fund said Ogin's remaining assets are being divested and it's being wound down.

"Commercially this has not been a successful investment for the NZ Super Fund and we are disappointed with the outcome," chief investment officer Matt Whineray said. "We went into this investment knowing that the company was early-stage. We accepted that because of the earlier stage investment there were a broader range of possible outcomes associated with the potential for high returns."

The Ogin investment barely dented the fund's returns, representing just 0.2 percent of its $30.1 billion portfolio at the time of the write-off. Since then, the fund has expanded to $34.1 billion as at March 31.

Whineray said the fund still sees long-term value in alternative energy.

The fund's investment in Ogin grew out of its participation in the Innovation Alliance, a group of institutional investors seeking expansion capital opportunities around the world. The other investment the fund has made through the alliance is $US50 million in early 2013 into Bloom Energy which uses solid oxide fuel cell technology to create power.

(BusinessDesk)


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Venture 101 - diversification. At least they are only investing relatively small amounts (% of funds). But one wonders what impact those funds could of had supporting a range of NZ tech investments?

Even worst case NZVIF is roughly breakeven.

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"Whineray said the fund still sees long-term value in alternative energy."

That statement is a worry. Neither wind nor solar sourced energy, excepting for small-scale, niche applications, can be anywhere near viable with current and projected long-term fossil-fuel prices. That is because both wind and solar provide very diffuse and dilute energy sources (as well as being intermittent and unreliable). These characteristics mean that wind and solar generating installations inevitably have very high relative capital costs that doom their financial viability in the absence of massive taxpayer and/or consumer subsidies.
Mr. Whineray should quit any other investments in alternative energy immediately.

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1: Venture 101 - invest in things you understand. And yes - it's incredibly frustrating to see this happen when we could have turned $50 million into real money here in NZ. If you want to invest $50 million in IP plays then talk to Auckland Uniservices - they manage these sort of opportunities.

2: Alternative Energy: Clearly the future is here but the marginal price of electricity generation is going to trend towards zero as battery (very important) and solar generation technology continues to evolve. Already the prices are competitive in some locations and at scale.

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Lance, your claims re alternative energy and battery technology are both completely wrong and illogical. Alternative energy (wind or solar) prices at any location and scale are not competitive without taxpayer and/or consumer subsidies and will not be until fossil fuel prices are much higher than those prevailing at present. Repeating "green" propaganda endlessly does not make it more true. Do you understand the principles of net present value analysis? Your comment suggests not.

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There is no gaurantee that you could have turned this money into more in NZ. Currently unless I am wrong all but 1 of your portfolio companies are profitable?

I think you need to do a bit more research on basic economics of energy and how they are largely subsidised

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*unprofitable

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A Transparent high performing organisation

Keep up the good work.

Thank you

Sincerely
A taxpayer and stakeholder

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Is there any accountability for the loss? or is it just a matter of oh well it's only taxpayers money.

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One suspects not by the comment above. $50m is a drop in the bucket according to these guys.

But one has to ask why they thought this was a smart investment in the first place.

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