Shanghai Pengxin wants to lift NZ farm assets to $1b in five years

File photo / Christine Cornege

The New Zealand farm group arm of the Shanghai Pengxin Group owned by Chinese billionaire Jiang Zhoabai says it plans to double its $500 million of local assets within the next five years.

Andy Macleod, chief executive of the Pengxin New Zealand Farm Group, said the group had kept a low profile since its controversial 2012 purchase of the former Crafar Farms for $200 million, which was the largest-ever foreign acquisition of New Zealand land by value.

"We've wanted to get some runs on the board and we are a private company," he told farmers at a Federated Farmers dairy conference in Taupo yesterday. "We are 100 percent Chinese owned and do get in the limelight because of that."

Macleod said the group was hunting for more farms because it wanted to have scale.

"We have $500 million in assets under ownership and have a directive from the chairman to look at doubling that exposure within New Zealand. We have 26 farms at the moment and are looking for plus 50-odd farms," he said.

In addition to the 13 Northland dairy farms and three support farms it bought in the Crafar deal, the group also has 13 dairy farms totalling 3942 hectares in the South Island after taking a 74 percent stake in Synlait Farms in a $85.7 million joint venture with its chief executive Juliet Maclean and director John Penno in late 2013.

Macleod said the group is awaiting Overseas Investment Office approval to buy the 13,843 hectare Lochinver Station near Taupo through its subsidiary, Pure 100 Farm.

The sheep and beef farm is reportedly worth about $70 million, and would be the second-biggest acquisition of farmland by a foreign buyer. The group wants to establish a dairy unit on the station on a part of the land that backs on to one of the former Crafar Farms.

All 20 staff have been assured they would keep their jobs under the new ownership if approved.

And it also has sales and purchase agreements in place to buy an undisclosed number of farms valued at $70 million in Northland and another farm at Taharoa next door to one of its existing properties.

He described the country's foreign investment process as "good" despite the delays it caused because it added "internal discipline".

Its North Island farm properties which are managed by Landcorp under a contract that goes through to 2017 are widespread which works against the economies of scale.

Macleod said there was no reason the group couldn't sell properties though it had no immediate plans to do so. It also wouldn't sell land where it was still required to meet conditions set as part of Overseas Investment Commission approval, he said.

Many of those OIO conditions have already been met in respect of the North Island farms and the company has decided to increase the $18 million of investment it promised on the run-down farms to $22 million.

The New Zealand dairy team had been scouting for farms for the Chinese group to purchase in Australia and South Africa, Macleod said.

Set up in 1997 as a commercial property developer, Shanghai Pengxin began diversifying into agricultural assets in 2005. According to the website of its Milk New Zealand subsidiary, it now controls more than 12,000 hectares of land in South America, Cambodia and China, farming wheat, corn, soybeans and sheep.

It said the company wants to utilise its contacts to help the New Zealand dairy industry sell into China and may in time become involved in exporting non-dairy products from New Zealand too.

Milk New Zealand reported an increased profit of $32.8 million in December for the year ended June 30, 2014, up from $11.1 million a year earlier. It has signed a supply and purchase agreement with Miraka for ultra-heat treated milk.

Through its farming operations, Milk New Zealand owns shares valued at $23 million in dairy cooperative Fonterra and $827,569 in fertiliser cooperative Balance Agri-Nutrients.

Jiang Zhoabai, ranked 91 on the Forbes Rich List with estimated wealth of US$1.7 billion, has also bought commercial properties and invested in a number of tourism assets in New Zealand.