New Zealand Rural and Agribusiness sector undergoing major transformation

Colliers International builds rural and agribusiness expertise.

New Zealand’s agribusiness growth and the attractiveness of primary products to offshore markets have attracted the attention of international purchasers, pushing foreign direct investment in New Zealand to all-time highs and changing the nature of New Zealand’s traditional family farm model.

The corporatisation of the primary industry sector has been driven by international interests looking to grow and enhance production, increase certainty in the supply chain and increase their skills and management capability in a country globally renowned for agribusiness.

Foreign direct investment (FDI) in New Zealand reached NZ$101 billion this year, up from NZ$90 billion in 2008. Just under half of New Zealand’s FDI originates from OECD countries, with 45 per cent from APEC.

The increasing requirement for farm management to reach its maximum potential and profitability in order to remain globally competitive is driving the need for farms to amalgamate for economies of scale and utilisation of new technologies. This is leading to further corporatisation of the farming sector in New Zealand, a trend driving the need for a greater level of detail when evaluating assets.

As a result, Colliers International has established a Rural & Agribusiness division in New Zealand. The new division, which will be led by Shane O’Brien as National Director, will provide transaction services to clients across the Rural & Agribusiness sector throughout New Zealand.

Mark Synnott, Chief Executive Office of Colliers International in New Zealand, said the new division will enable Colliers International to provide their rural and agribusiness clients with increased expertise and coverage in this sector. “We recognise the increasingly corporate and global nature of agribusiness and the need to offer clients expert local service backed by our global reach and expertise.”

Mr O’Brien joins Colliers International from Northington Agricapital, a Christchurch-based investment bank focused on the primary industry sector which he co-founded in 2012. During his 20-year career in rural real estate, he has established a strong track record of working with the vendors of some of New Zealand’s most iconic farm properties, from intensive dairy and traditional farm units to high country stations.

Mr O’Brien is joined by Ruth Hodges who comes to Colliers International as a Director following five years at Bayleys Canterbury, where she was involved in some of the region’s largest rural sales transactions. Ms Hodges has transacted over $200 million worth of rural property.

“Bringing the Colliers International brand into the rural real estate sector, along with Shane and Ruth’s experience and networks, will offer our clients expert knowledge and an increased level of service,” Mr Synnott said.

The new division will work closely with Colliers International’s well-established Rural & Agribusiness team in Australia – a leading provider of strategic valuation, advisory and transaction services in the sector, continuing to enhance our overall global capability.

In Australia, Colliers International has recently expanded its Rural & Agribusiness team with the appointment of Richard Royle and Alex Delves to the NSW team.

Key rural and agribusiness transactions in New Zealand in the first half of 2014.

In the first half of 2014 a number of major transactions have occurred across multiple sectors. These include:

• $212 million investment by China Mengniu Dairy Company, the majority shareholder of Yashili, intends to continue to construct a milk processing plant in Pokeno.

• SFL Holdings Limited (74 per cent Chinese ownership, 26 per cent New Zealand ownership) to acquire up to 100 per cent of the shares in Synlait Farms Limited.

• Ceol & Muir Inc. with a 50 per cent split in ownership from Italy and Argentina was granted OIO approval to take over and develop the farming operation at Onetai Station.

• A large-scale farming business Craigmore Farming who bought two 400 plus hectare farms in the South Island.

• Matariki Forests, the third largest owner of forestry in New Zealand with 66 per cent ownership in the US, purchased 309 hectares of land in Opotiki.

• Qwil Investments (the majority of ownership split between various Hong Kong (SAR) owners) and Accolade Wines (US and Australia with 38 per cent and 19 per cent ownerships stakes) have purchased 596 hectares under a freehold and leasehold deal respectively.

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