Super Fund tips big rural buy up

Super Fund chief executive Adrian Orr. Photo / Paul Estcourt

The New Zealand Superannuation Fund could potentially partner in the buy up of clusters of farms as it moves to invest between NZ$300 million and NZ$500 million through its rural land strategy over the next three to five years.

In an interiew with interest.co.nz Super Fund CEO Adrian Orr emphasized the rural push was a global, rather than merely New Zealand, one. However, he noted New Zealand was one of the best farms in the world so should "get a slice" of the investment.

Orr, former Reserve Bank deputy governor and head of financial stability, said the rural strategy was largely driven by riding the wave of global population growth, demand for protein and scarce resources.

Created by the previous Labour-led government to help offset the burden of paying universal superannuation to a generation of retiring baby boomers, the Super Fund's value stood at NZ$16.71 billion as of April 30.

Asked whether the 16 Crafar farms being sold by receivers KordaMentha or Dairy Holdings Ltd, the dairy farming business controlled by Allan Hubbard the owner of struggling South Canterbury Finance, might be of interest, Orr said it was too early to rule out anything.

"We don't mind clusterings of farms because as part of a global portfolio it doesn't have to be diversified just to New Zealand," Orr said. "It (the Super Fund) is diversified globally."

The Super Fund was currently working towards selecting managers who would have their own capital in the game and oversee the rural land investment.

Meanwhile, Orr said the Super Fund was also targeting a few major domestic direct investments by taking "big licks of big things." Along the lines of the recent purchase of Shell's New Zealand retail and distribution business in partnership with Infratil for NZ$696.5 million, this could see the Super Fund target businesses worth more than NZ$1 billion. Such deals could include debt funding and would involve an investment partner or partners.

"We're trying to get away significant sums of capital into long-term assets in New Zealand that give us the return we need and hopefully long dated New Zealand dollar inflation protected returns," Orr said.

The Super Fund was specifically interested in collective assets, co-operatively owned assets and Crown owned assets, should it be able to get access to the latter. The Super Fund viewed itself as the perfect investment partner for investments in these areas, Orr added.

"We're in New Zealand, we've a very long-term horizon, we're here to stay and we can bring capital and expertise to the table."

Asked whether the Super Fund might be interested in investing in Kiwibank after Finance Minister Bill English suggested last week the Government might sell a minority stake in the bank, Orr declined to comment on particular businesses.

"(But) the assets we're interested in are ones where we can get the commercial rate of return we're after."

And asked whether distressed private equity owned businesses such as directories group Yellow Pages or TV3 owner MediaWorks might be of interest as investment opportunities, Orr said everything was always of interest.