Forming partnerships with large global companies is the key to unlocking the potential of New Zealand agri-sector earnings, according to a leading commentator
KPMG’s latest Foreign Direct Investment report, released today, analyses trends in foreign direct investment based on Overseas Investment Office (OIO) approvals from 2013 to 2015.
This research shows that offshore companies invested a total of $3.4 billion in New Zealand-based agri-sector assets.
Ian Proudfoot, who is KPMG’s Global Head of Agribusiness, says New Zealand must remain open and welcoming to high-quality foreign investors.
“New Zealand’s agri-sector annually exports $38b worth of products…which are then turned into quarter of a trillion dollars’ worth of retail products. The only way we’re going to capture a fairer share of the value we create is by having good quality foreign partners in offshore markets, so that we can grow businesses of a global scale”.
Proudfoot says the optimal kind of foreign investment is where offshore investors are injecting capital into New Zealand-owned entities, as opposed to transactions between two offshore companies.
One such example is the deal between Silver Fern Farms and Shanghai Maling, due to take effect in January 2017. The Chinese-based company is investing $261m in a 50/50 partnership with Silver Ferns Farms; with a view to building one of the world’s leading red meat brands.
“Such investments grow New Zealand’s presence on the world stage,” says Proudfoot.
“Well connected international partners have the ability to connect our farmers directly with millions of consumers”.
This is the third Foreign Direct Investment report released by KPMG. In response to market demand, the analysis was extended to include insights into investment by sector – including forestry, wine, dairy, and sheep and beef.
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 49% of all freehold land consented to under the Overseas Investment Act 2005.
Ian Proudfoot says this is likely due to high volumes of sales among South Island dairy-conversion farms. He says owners facing consecutive seasons of low returns are making decisions to sell heavily-geared dairy farms. Buyers are capitalising on better-value purchasing.
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.