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Timing
A decision is required by
2 September 2024 to comply with the expectation in the
Ministerial Directive Letter
5 that the majority of consent decisions are made within half the
prescribed assessment timeframe.
6
Decision
1.
I have determined that, for the reasons set out in this report:
•
the relevant overseas person(s) and individuals with control are as set out in the
report;
•
the investor test has been met;
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•
the special forestry test is met.
2.
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The Minister of Finance has not declined consent to this transaction.
3.
I therefore
grant consent subject to the conditions in
Attachment 1.
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Kirsty Hulena
Principal Customer Regulatory Specialist
Overseas Investment – LINZ
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Date: 28 / 08 / 24
the
under
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5 Dated 6 June 2024.
6 The assessment timeframe for this application is 55 working days.
A.
Background and proposed transaction
4.
West Coast Forests Limited Partnership (
Timber LP) is acquiring a 35-year forestry
right over approximately 26,700 hectares of land
Relevant Land7) across the West
Coast of the South Island from Ngāi Tahu Forestry Limited (
Vendor) (
Forestry Right)8.
5.
Fiera Comox Global Sustainable Timberland Fund L.P. (the
Master Fund) was
established to facilitate investment in forestry9.
6.
Fiera Comox Global Sustainable Timberland Fund (Canada) Limited Partnership
(
Canadian Feeder Entity A) and Fiera Comox Global Sustainable Timberland Fund
(Canada II) Limited Partnership (
Canadian Feeder Entity B) may acquire up to 100%
interest in the Master Fund (
Future Funding Arrangement). Together with Timber LP
they form the Applicants (
Applicant).
(The Acquisition of Forestry Right and the Future Funding Arrangement are referred to
as the
Investment.)
7.
The Investment involves two transactions:
a) Acquisition of the Forestry Right; and
b) Acquisition of interests in a limited partnership.
(a) Acquisition of Forestry Rights by Timber LP
8.
The first transaction involves Timber LP’s acquisition of a single rotation Forestry Right
over the Land. The Forestry Right grants Timber LP the right to continue to use the
Land for forestry purposes and to harvest the Land.
9.
The asset sale agreement that covers the Investment also involves other forestry assets
such as standing trees, inventory, plant and equipment, records, and benefits of certain
contracts and agreements.10
10.
Following the completion of the transaction:
a) The Vendor will remain the registered owner of the underlying freehold titles to
the Land;under the Official Information Act 1982
b) The Vendor will acquire a 15% interest in Timber LP;
c) The Vendor will acquire a 15% interest in Timber LP’s general partner,11 and its
consent will be required on several significant decisions12; and
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7 The Land over which the Records of title for the Forestry Right are going to be registered.
8 Media release:
https://www.fieracapital.com/en/press-releases/fiera-comox-to-partner-with-ngai-
tahu-holdings-over-forestry-estate 9 Established in October 2023 to invest primarily in New Zealand, North America, Western Europe,
Scandinavia, and Australia.
10 s9(2)(b)(ii)
11 Which is the 32660381 GP Limited.
d) Timber LP, as grantee under the forestry right, will have the right to harvest the
Land and will be required to hand back to the Vendor the Land as it is
harvested in accordance with the terms of the forestry right.
(b) Future Funding Arrangements
11. The Applicants have also requested consent for the Canadian Feeder Entity A & B’ to
be able to acquire up to 100% interest in the Master Fund following Timber LP’s
acquisition of the Forestry Right. Consent is sought because the Master Fund is an
open-ended fund. This means that investors can be admitted over time, thus, each
Canadian Feeder Entity’s interest in the Master Fund is expected to fluctuate.
12. Under the Act, an overseas person needs to apply for consent for any investment that
will result in an increase of an existing more-than-25% ownership or control interest
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past a set ownership or control limit.
Land
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13. The Relevant Land is part of a larger parcel of land owned by the Vendor, which is
approximately 45,000 hectares of land (
Larger Parcel) comprising 16 commercial
forests on the West Coast of the South Island known as the ‘West Coast Plantations
Estate.’
14. The Forestry Right covers the Relevant Land (approximately 26,700 hectares), being the
productive forest area of the Larger Parcel and Timber LP will perform certain forest
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estate management services on the areas not covered by the Forestry Right pursuant
to the Forest Management Services Agreement (
MSA)13.
15. The Relevant Land comprises a number of forests and these are detailed at
Schedule 1
to
Attachment 1.
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16. The Land is currently used primarily for forestry purposes, with approximately 20,365
hectares being the net stocked area.
the
Vendor
17. The Vendor is Ngāi Tahu Forestry Limited. Its sole shareholder is Ngāi Tahu Holdings
Corporation Limited, which in turn is owned by Ngāi Tahu Charitable Trust, the sole
under
trustee of which is the Te Rūnanga o Ngāi Tahu. The beneficial owners of the Vendor
are the members of the Ngāi Tahu Whānui.14
18. s9(2)(b)(ii)
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12 s9(2)(b)(ii)
13 Agreement between Ngāi Tahu Forestry Limited (Vendor) and West Coast Forests GP Limited
(Purchaser)
14 As defined in the Te Rūnanga o Ngai Tahu Act 1996.
B. Application of the Act
19. The Land is sensitive because it is non-urban land over 5 hectares in size15, includes
land that is to be used as reserve, public park or for recreations purposes or as open
space16, includes residential land17, adjoins land held for conservation purposes under
the Conservation Act 198718, adjoins a national park held under the National Parks Act
198019 and adjoins a reserve under the Reserves Act 197720, so consent is required.21
The following criteria for an investment in sensitive land apply to this application:22
•
The investor test must be met.23
•
The benefit to New Zealand test must be met under the special test relating to
forestry activities (
special forestry test).24
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•
You must also note whether the Investment is a transaction of national interest
and, if so, whether the Minister of Finance has decided that the Investment is
contrary to New Zealand’s national interest.25
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20. In order to satisfy the special forestry test the decision-maker must be satisfied that:
•
The Land is already used when the transaction is entered into, and will continue
to be used (nearly) exclusively for forestry activities;26
•
The Land is not exclusively residential land and any residential land that adjoins
other land that is included in the relevant land but is not residential land.27
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•
The non-occupation outcome will, or is likely to occur in relation to the Land;28
•
Existing arrangements will be maintained;29
•
Whenever a crop of trees is harvested on the Land, a new crop is likely to be
established to replace the crop that is harvested;30
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Existing conditions of consent will be complied with;31 and
the
•
Logs continue to be supplied under existing supply obligations.32
15 Row 2, Table 1, Part 1, Schedule 1 of the Act.
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16 Row 8, Table 1, Part 1, Schedule 1 of the Act.
17 Row 1, Table 1, Part 1, Schedule 1 of the Act.
18 Row 3, Table 2, Part 1, Schedule 1 of the Act.
19 Row 6, Table 2, Part 1, Schedule 1 of the Act.
20 Row 4, Table 2, Part 1, Schedule 1 of the Act.
21 Sections 10(1)(a) and 12(1)(a) of the Act.
22 Set out in section 16(1) of the Act.
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23 Sections 18A and 16(1)(a) of the Act.
24 Section 16(1)(c)(ii) and 16A(4) of the Act.
25 Section 16(1)(g) of the Act.
26 Section 16A(4)(a) of the Act.
27 Section 16A(4)(b) of the Act.
28 Section 16A(4)(c) of the Act.
29 Section 16A(4)(d) of the Act and Regulation 29(2)(a) of the Overseas Investment Regulations 2005
(
Regulations).
30 Section 16A(4)(e) of the Act.
31 Section 16A(4)(d) of the Act and Regulation 29(2)(b) of the Regulations.
21. We assess the investor test in
Part C, the special forestry test in
Part D, discuss
national interest matters in
Part E and Fresh or seawater areas in
Part F.
C. Applicant and investor test
22. This section describes the Applicant and assesses whether the investor test is met.
Business Activities
23. Timber LP is a New Zealand limited partnership recently established for purposes of
the Investment. Timber LP is managed by its general partner West Coast Forests GP
Limited, a New Zealand company. Timber LP is directly owned by its initial limited
partner, 32660381 HoldCo Limited, a New Zealand company. 32660381 HoldCo
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Limited is directly owned by the Master Fund.
24. The Master Fund is an Ontario limited partnership recently established to invest in
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timberland primarily in New Zealand, North America, Western Europe, Scandinavia, and
Australia. Its commercial objectives relate to generating value from the sale of logs and
carbon credits, as well as capital appreciation.
Ownership and control
25. Master Fund is owned by its ultimate investors via four fund vehicles:
a)
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Canadian Feeder Entity A33;
b) Canadian Feeder Entity B34;
c) s9(2)(b)(ii)
and
d) s9(2)(b)(ii)
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(collectively, the
Fund Investor Vehicles)
the
26. Each of the Fund Investor Vehicles is managed or controlled by a general partner,
which is ultimately owned by Fiera Comox Partners Incorporated (
Fiera Comox
Partners), a global investment manager that manages private investment strategies in
agriculture, timberland, private equity, and private credit. As of 31 March 2024, Fiera
under
Comox has C$4.0 billion in assets under management.
27. Fiera Comox Partners, via its Board, manages the Master Fund. Its Board has 6
members, including its partner and Chief Executive Officer, Antoine Bisson McLernon.
The Board is assisted by an Investment Committee, the members of which are a subset
of the members of the Board. The Investment Committee approved the acquisition of
the Forestry Right.
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28. A diagram of the intended ownership structure is in Attachment 2.
Relevant overseas person and individuals with control
29. We recommend that the ‘
relevant overseas person(s) is (collectively:
32 Section 16A(4)(d) of the Act and Regulation 29(2)(c) of the Regulations.
33 Which currently has a s9(2)(b)(ii) interest in the Master Fund.
34 Which currently has a s9(2)(b)(ii) interest in the Master Fund.
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Head of Natural Capital)
John Michael Thorman*
Director of the General Partner
Summary of investor test
31. The relevant overseas persons and individuals with control established none of the
factors contained in section 18A(4) of the Act, therefore we consider the
investor test
has been met.
D. Investment plan and special forestry test
32. This section describes the Investment and our assessment of whether it is likely to
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meet the special forestry test in the Act.
Investment plan – use of the Land
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Forestry activities
33. The Relevant Land is already used exclusively for forestry activities, and this use will
continue.
34. Timber LP will be granted the Forestry Right (being a single rotation forestry right) over
the Relevant Land (being that part of the Land which comprises productive forest).
Timber LP will perform certain forest estate management services (for a f
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accordance with the terms of the MSA.
35. The Forestry Right and MSA include certain contractual terms providing Timber LP with
the right to progressively harvest the Land, requiring Timber LP to replant the
harvested areas, and requiring Timber LP to main
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in connection with the Relevant Land.
the
36. The table in
Figure 1 below summarises the current use of the Land:
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s9(2)(b)(ii)
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Figure 1: Current use of the Land37
37. s9(2)(b)(ii)
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Harvesting and replanting
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38. The Forestry Right provides the Applicant with the right to progressively harvest the
trees and to replant the Relevant Land.
the
39.
Special Condition 1 will ensure that the Relevant Land continues to be used for
forestry activities, including the replanting of the Relevant Land.
40. The harvest plan shows harvesting commencing in 2024 and continuing through until
2058.
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41. Under the MSA the Applicant is obliged to replant with like-for-like species, at no less
density than the previous trees and within 4 years of harvest.
New Zealand Emissions Trading Scheme (NZETS)
42. The Vendor has registered the Relevant Land in the ETS. The Applicant does not intend
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to take over this registration or to participate in the ETS. The Vendor will continue to
be responsible for, and comply with, all ETS registration requirements relating to the
Climate Change Response Act in respect of the Land.
Residential land
37
NSA means stocked areas,
Gaps means unstocked areas,
AWRP means areas awaiting replanting.
38 s9(2)(b)(ii)
43. Part of the Relevant Land comprising the Te Wharau forest (contained within record of
title 334907), and Waimea forest (contained within record of title WS2B/1469) is
classified as “residential land” for the purposes of the Act. However, the residential land
adjoins other land that is included in the relevant land but is not residential land.
Non-occupation outcome
44. The Applicants confirm that the Relevant Land will not be used for residential
purposes. There are no residential dwellings on the Land.
45. We are satisfied that the non-occupation outcome is likely to occur.
Special Condition
2 meets the requirement for a condition that the Land not be occupied by the classes
of persons mentioned in Schedule 2, clause 17 of the Act (as shown above) for
residential purposes (see the proposed decision in
Attachment 1).
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Consultation / Third Party Submissions
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46. No consultation was required for this application and no submissions were received.
Requirements
Existing arrangements
47. The Applicant has identified a number of existing arrangements for specified purposes
which it will continue to implement and/or maintain, and this will also be ensured
through
Special Condition 3.
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48. There are several access arrangements in place over parts of the Relevant Land,
including:
a. unregistered deeds granting right of way easements granted to the Crown –
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either as rights of way in gross, or appurtenant to certain Crown land;
b. an agreement to grant an easement39 and conservation covenant;40
the
c. mining permits/licences registered on the records of title for the Land, many of
which have expired or have been cancelled;
d. five current access arrangements for mining and exploration over the Land;41
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and
e. nine registered arrangements in favour of various parties.42
Timber LP will continue to maintain these existing arrangements to the extent they
relate to the Relevant Land and to the extent they are within Timber LP’s control.
49. Access arrangements will also be provided to the beneficial owners of the Vendor to
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undertake activities of cultural importance; activities related to wāhi tapu sites; fishing,
hunting, collecting freshwater crayfish, collecting traditional medicines; recovery of
pounamu, pākohe, serpentine and kōkōwai; and the placing of beehives.
39 To allow access to Powerhouse Road.
40 For conservation purposes over two forests - the Mahinapua and the Kaniere forests.
41 Mining permits over records of title WS8C/1311; WS8C/1311; 339308, 334918 and 334919; 727378
and 283695; and 727378 and 283695.
42 Including public access easements and right of way easements.
Conditions of consent
50. There are no existing conditions of consent to comply with.
Log supply agreements
51. There are a number of existing log supply obligations which will be required to be
maintained and these are secured under
Special Condition 3.
52. The Applicant confirms that it will continue to supply logs in accordance with the terms
of the Existing Log Supply Contracts (so long as the Existing Log Supply Contracts
remain in place).
53. The Forestry Right requires Timber LP to offer to sell a combined total of at least
100,000 cubic metres of logs (or 50% of the logs which are offered for sale by Timber
LP in that year, if lower in any given year) in priority to the following:
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a) the parties to whom Timber LP is required to sell logs under terms of any
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existing log supply agreements;
b) the Vendor; and
c) processors on the upper West Coast of the South Island.onditions and rationale
54.
Special Condition 1 will require that the Relevant Land continue to be used for
forestry activities, whilst
Special Condition 2 will ensure that the non-occupation
outcome is met. In addition,
Special Condition 3 will require the maintenance of
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existing arrangements for specified purposes, existing consent conditions for specified
purposes which remain to be completed, and the preservation of log supply
obligations.
Conclusion – special forestry test Official
55. After considering the application, we are satisfied that the Investment complies with
the special forestry test.
the
E.
Transaction of national interest
56.
under
LINZ determined that the Investment is a transaction of national interest under section
20A of the Act because the Investment involves non-New Zealand Government
Investors (NNZGIs)43, who have a greater than 25% interest in Master Fund, and
therefore in Timber LP.
57. The Minister of Finance has considered this Investment and decided that it is not
contrary to the National Interest.
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F.
Fresh or seawater areas
58. This investment includes fresh or seawater interests. However, the fresh or seawater
acquisition provisions set out in Schedule 5 of the Act do not apply where the owner of
the affected land is not changing (as is the case here).
43 s9(2)(b)(ii)
G. Conclusion
59. For the reasons set out in this report, we consider that the criteria for consent have
been met and our recommendation is to
grant consent.
60. We refer you to
Attachment 1 to review the Proposed Decision (including consent
conditions), and from page 2 of this Assessment Report to record your decision.
H. Attachments
61. Proposed Decision
62. Intended ownership structure
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iv.
Offer without reserve: if you have not disposed
Within 9 months of our notice
of the Interest in Land within 6 month of our
notice, offer the Interest in Land for sale by
auction or tender without a reserve price or
minimum bid and dispose of the Interest in Land.
v.
Report to us about marketing: tell us in writing
By the last day of every March,
about marketing activities undertaken and offers
June, September, and December
received for the Interest in Land.
after our notice or at any other
time we require
vi.
Report disposal to us: send us, in writing,
Within 1 month after the
evidence of the following:
Interest in Land has been
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disposed of
a. That you have disposed of the Interest in Land
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(including copies of sale and purchase
agreements, settlement statements and titles
showing the purchaser as registered proprietor)
and
b. That the purchaser is not your associate.
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Reporting conditions
We need information from you about how your investment plan is tracking so we can monitor
your progress against the conditions.
In addition to Settlement reporting (as set out in Standard Condition 2) you must provide LINZ
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with reports detailing the progress of the investment. The reports must:
i.
be submitted via our
Webform by these dates:
the
a. 31 August 2025
b. 31 August 2030
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ii.
contain information about:
a. your progress in implementing the special conditions (which can include photographs,
maps or aerial imagery as evidence of compliance with relevant conditions)
iii.
Follow the format of the template annual report published on our website
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If requested in writing by LINZ, the Consent Holder(s) must provide a written report within 20
working days (or such other timeframe as specified) on any matter relating to its compliance
with:
i.
the representations and plans made or submitted in support of the application and
notified by the regulator as having been taken into account when the consent was
granted, or
ii.
the conditions of this consent.
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328614
Lot 8 & 9 DP 382020
303990
Lot 1 DP 2847
303991
Lot 1 DP 2965
303992
Lot 1 DP 3117
303993
Lot 1 DP 3084
WS2B/1469
Reserve 199
303994
Lot 2 DP 3159
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Lot 3 DP 3159
328609
Lot 2 DP 382020
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Lot 3 DP 382020
328612
Lot 5 DP 382020
303989
Lot 1 & 2 DP 2843
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