$125m Landco stake for Todd

A new suburb will arise in this quarry. Picture / Dean Purcell

Wellington's Todd Capital - an arm of the Todd family dynasty - is planning to buy into Auckland land bank entrepreneur Greg Olliver's company Landco for $125 million.

The deal is being watched closely by several players, including Fletcher Building and Elders Finance, the finance company owned by Eric Watson and Mark Hotchin.

Business Herald sources say the planned deal is close to completion, with investment bank First NZ Capital playing a key advisory role.

Neither Todd Capital nor Landco will comment.

Landco has borrowed big from finance companies such as Elders and Strategic Finance.

Todd's cash would help Landco to cut those borrowings - which cost much more in interest and fees than bank debt.

A finance company can generally charge 15 to 20 per cent annually, compared with a bank's 9 per cent.

A source familiar with the planned deal said Landco had been investigating funding options for more than six months as part of "aggressive" growth plans.

The development of a new Auckland suburb on 110ha of disused Mt Wellington quarry land is one of Landco's projects.

It is New Zealand's biggest private urban housing development and expected to be worth more than $1.5 billion when finished, according to news reports last year.

It is also Fletcher Building's link with the company.

Landco bought the Mt Wellington quarry from Fletcher and Brierley Investments for $38 million in 2001.

Last year, an Overseas Investment Commission approval showed Fletcher would pay $299.8 million to Landco over several years to buy back 60.27ha after it had been developed as residential land. It needs the land to feed Fletcher Residential - New Zealand's largest builder of houses.

Cutting its debt would hurt some of the large lenders. Landco is one of the biggest property exposures for Elders Finance which, in March, was reported to have lent about $500 million to the sector as a whole.

Landco describes itself as a "land development, agribusiness and viticulture company", with one of the largest urban land portfolios in Auckland and rural properties in the North and South islands.

Todd Capital is the investment arm of the Todd Corp and holds stakes in several listed companies, including INL and Metlifecare.

The Todd family was described in the most recent National Business Review Rich List as the nation's wealthiest, with business interests worth about $2.2 billion.

For Todd, the planned Landco deal coincides with the possibility of a takeover of Metlifecare - the retirement village and aged care company that it owns 35 per cent of.

Metlifecare founder Cliff Cook has put his 25 per cent stake on the block.

On yesterday's share price, Todd's stake was worth $102.4 million.

In other words, a takeover could free up nearly as much money for Todd as the company is planning to put into the deal with Olliver.

Todd Capital's website says the company has stakes in INL - the majority owner of Sky Network Television - Australian wireless tower network company Crown Castle, New Zealand wireless broadband company Woosh and San Francisco venture-capital fund Granite Ventures.