New Zealand is our home. It is a market we understand and value, and one in which we have some advantages that others don’t. We are local and Crown-owned; we are relatively large in New Zealand terms; we have a long investment horizon and the ability to invest in illiquid assets (assets that can be hard to sell quickly) in order to earn a premium over time. Our local advantage means that we are strongly weighted to New Zealand-based assets relative to the size of the local market.
Over time, we have grown to become one of New Zealand’s largest institutional investors, and a significant player in its capital markets. Our $6.3 billion New Zealand investment portfolio (or 14% of investments) includes more than $1 billion in the local share market, along with large investments in Kaingaroa Timberlands, Fidelity Life, NZ Gourmet, Hobsonville, Datacom, a portfolio of hotels and rural farmland. We are also invested, through external investment managers, in small, privately owned companies, property developments and social infrastructure.
Our direct investment activity in New Zealand commenced in 2006 when we acquired a stake in Kaingaroa Timberlands, but was further cemented with a letter from then Minister of Finance Bill English in May 2009 directing the Guardians to identify and consider opportunities to increase the allocation to New Zealand assets in the Fund. Importantly, the directive was not intended to be inconsistent with our duty to invest the Fund in a prudent and commercial manner. Following this directive, we undertook a review of the domestic opportunity and saw the potential to invest further into New Zealand outside traditional listed markets.