Another giant offshore tech sale: $500m Hawaiki Cable sold to Singapore giant

The Hawaiki Cable crew pictured in 2016. From left: Founder Remi Galasso, CFO Laurent Le Breton, director and investor the late Sir Eion Edgar, Hamish Edgar (who would later succeed his father on the board) and director and investor Malcolm Dick. Photo / Supplied

The only majority locally-owned international cable is set to be sold offshore - continuing 2021's string of sales of local tech companies to overseas buyers.

Hawaiki Cable says it has entered an agreement for Singapore infrastructure and shipping giant BW Group to buy 100 per cent of its shares. The deal is subject to regulatory approvals.

No price tag was put on the deal. But directors and investors including the rich lister Malcolm Dick, Hamish Edgar (who replaced his late father Sir Eion on the board), Remi Galasso and 2degrees founder Tex Edwards, were presumably looking to at least recoup the $US350m ($490m) that Hawaiki said it cost to build its trans-Pacific cable, which went live in 2017.

The Government bought $65m in cable capacity in a multi-year anchor contract to help the new cable venture get off the ground and introduce competition, and give NZ more resiliancy, by breaking the Southern Cross Cable's long-time monopoly.

And Northland Inc - a unit of the Northland Regional Council "provided support" to "facilitate" a landing station for Hawaiki Cable at Mangawhai Heads.

Image / Supplied

A statement issued by Hawaiki overnight said the Auckland-headquartered company made no mention of future projects, including its proposal for a new cable launching Southland with Australia - which would, in turn, provide the proximity to international connectivity that is a prerequisite for the $700 million Datagrid project.

Proposed by Hawaiki founder Remi Galasso and Hawaiki director Malcolm Dick, Datagrid would be a giant data centre designed to take up the slack from the Manapouri Power Station if Rio Tinto does close its Tiwai Point smelter.

It's yet to be seen if BW will put its financial muscle behind the project, or focus on other areas of Hawaiki's business. Galasso told the Herald there would be "news on Hawiaki's next development very soon".

Strategic assets out of local control

There are two other major broadband cables that link New Zealand to the outside world: The Southern Cross Cable (soon to be supplemented by Southern Cross Next, under construction) and the Tasman Global Access cable.

The Southern Cross Cable - owned by a Bermuda-registered company of the same name, was formerly a cash cow for 50-per cent owner Spark, generating $60m or more profit per year in the form of dividends. But Southern Cross dividends were suspended in 2019 as the company sought to fund the new Next cable. The capital-raising process for Next also saw Telstra take a 25 per cent stake in Southern Cross, diluting Spark's holding to around 40 per cent (the telco's exact stake has yet to be finalised as the funding process continues. Spark says it will update at hits full-year results briefing on August 18).

Tasman Global Access, which links Auckland and Sydney, which launched in 2017, is a joint venture between Spark, Vodafone and Telstra, who each stumped for a third of the costs in the $100m venture.

The Hawaiki submarine cable landing and sod-turning ceremony at Mangawhai in November 2016. From left, with positions at the time: Hawaiki chief executive Remi Galasso, Communications Minister Amy Adams, Prime Minister John Key, Hawaiki investor and director Malcolm Dick, Hawaiki chairman and investor Sir Eion Edgar and Te Uri o Hau trustee Russell Kemp. Photo / Michael Cunningham

Galasso - a French telecommunications executive transplanted in NZ - pushed his dream for a new trans-Pacific cable, at the same time that rich-listers Rod Drury, Sam Morgan and Sir Stephen Tindall were attempting to get their Pacific Fibre venture off the ground. The Frenchman (who recently changed his location from Auckland to Singapore on LinkedIn).

It finally gained traction as Dick and Sir Eion (at the time chairman of Forsyth Barr) came onboard as directors and financiers in 2016.

Dick and his then partner Annette Presley were the co-owners of CallPlus, the Kiwi telco sold to M2 (later part of Vocus) in 2015 for $250m.

The sale of Hawaiki Cable to BW is the latest in a number of offshore tech deals this year, which has included the $100m+ sale of EzyVet, plus the sale of Vend ($455m), Timely ($135m), Seequent ($1.45b), Ninja Kiwi ($203m), and Education Perfect (in a majority-control deal valuing the firm at $455m), while December saw the sale of local retail hero Mighty Ape to Australia's Kogan for $128m.