Chinese buyer of Cullen Fund forests keen on more acquisitions
The North Island forest estates are the first step in the company's strategy to invest in the local industry.
The North Island forest estates are the first step in the company's strategy to invest in the local industry.
China Forestry Group New Zealand, a subsidiary of state-owned China Forest Group Corp, is keen on mopping up more local forests after buying a chunk of estates from the New Zealand Superannuation Fund.
The North Island forest estates are the first step in the Chinese company's strategy to invest in the local industry and look at other opportunities, it says in a statement.
The general manager of China National Forests, Lin Zhan, expects the forestry investment will generate new jobs.
"China Forestry Group NZ will establish a permanent base in New Zealand in order to manage the newly acquired forest estate," he says. "To ensure that the forests are managed to best practice, New Zealand based in-forest suppliers will continue to provide the in-forest services."
The Chinese company bought the majority of the portfolio, subject to Chinese regulatory approval, after getting the thumbs up from New Zealand's Overseas Investment Office, the super fund says in a statement. Part of that deal includes offering a scholarship to promote trade and business between New Zealand and China.
China Forestry Group NZ director Graeme Wong said it sees the acquisition as a long-term investment to retain continuity of supply.
"Owning the forestry estate will not likely see any reduction in the purchase of export logs from other New Zealand suppliers," he says. "Rather, it should see the company sourcing more of its timber requirements from New Zealand."
The superannuation fund, known as the Cullen Fund for its architect former finance minister Michael Cullen, sought a buyer for the blocks last year, when it valued the estates at some $91.1 million as at June 30.
General manager of investments Matt Whineray saysthe sale will let the fund focus on other domestic and international investment opportunities.
"We see more attractive investment opportunities for our purposes elsewhere. We are always working to ensure that we have the best possible mix of investments in the fund."
The rest of the portfolio was sold to New Zealand investors.
The Cullen Fund recently upped its stake in the Kaingaroa Forest, which is still its single biggest asset worth $945.1 million at March 31, and recently bought a $140 million stake in local IT company Datacom and 11 local dairy farms.
It is mulling whether to sell down its stake in service station chain Z Energy, which it co-owns with Infratil, with a potential listing in the third quarter. The fund valued its stake in Z at $523.9 million at December 31.
The Cullen Fund's timber assets, which accounted for 6 percent of the fund as at March 31, will still exceed $1 billion after the sale.
(BusinessDesk)