New Zealand’s strongly-growing economy is providing an attractive environment for foreign direct investment (FDI), according to research just released by KPMG New Zealand
KPMG has analysed trends in foreign direct investment from 2013 to 2015, based on Overseas Investment Office (OIO) approvals for the past three years.
This research shows the United States and Canada were our largest source of high-value investment in recent years – accounting for 17% and 15% of gross consideration respectively. They were followed closely by Australia (12%), China (9%) and Singapore (8%).
Justin Ensor, Deal Advisory Partner with KPMG, says New Zealand’s relatively strong economic growth is a “good news story” when compared with the rest of the world.
“Globally, we’re seeing a search for yield – this is partly due to the negative interest rate environments in some overseas markets. New Zealand remains quite attractive from an offshore investor’s point of view”.
Another positive take-out from the research was the broad base of investment; with both a good spread of investor countries and across a diverse range of sectors.
This is the third FDI report released by KPMG, with the first published in 2013. In response to market demand, KPMG has extended its analysis to include insights into investment by sector and by country.
Justin Ensor says many New Zealanders may be surprised to learn that agriculture-based investments were not New Zealand’s biggest FDI earner.
“While there has been $3.4 billion of agri-investment during that period, none of the deals were large enough to make it to the top 10 of publicly-disclosed transactions. We have had very strong interest in the top three sectors of utilities, real estate, and food”.
He says Asian-based investors have generally had a narrower focus; largely centred on agribusiness, food, and, waste management sectors.
“By contrast, traditional markets like the US and Australia tend to have a much broader base of investment, perhaps reflecting the maturity of their investment networks.”
The total foreign direct investment for the three-year period was approximately $26.3 billion, with the 10 largest transactions accounting for around 33% of that. The largest single transaction was the $1.3b sale of Goodman Fielder, which was jointly acquired by a Singapore-based company and a Hong Kong-listed investment firm. Another large acquisition, $1.0b for St Lukes Group, saw Singapore become New Zealand’s largest source of FDI by country in 2015.
Also included in this year’s report for the first time, KPMG has provided insights into land sales by region. The Canterbury, Otago and Southland regions account for nearly half of all freehold land consented to under the Overseas Investment Act 2005.
To get a full copy of KPMG’s report, titled Foreign Direct Investment in New Zealand: Trends and Insights into OIO decision summaries (2013 to 2015), please see here
The KPMG Foreign Direct Investment Report analyses the trends in foreign direct investment, through a review of the Overseas Investment Office approvals over a given period.
This is the third report, which has analysed approvals from the period January 2013 to December 2015. It complements the KPMG M&A Predictor, published every six months, which reports on Merger and Acquisition activity in New Zealand.