Māori businesses, driven by cultural values, which include a commitment to the environment, their people and sustainable growth, employ a diverse range of capital structures to fund their expansion. Capital structure refers to the mix of debt and equity that a company uses to finance its operations and growth initiatives. When considering this year’s top 10 Māori organisations, there is a material difference in how the top four have used debt to fund growth when compared to their more conservative peers.
Māori organisations have historically been conservative in their debt appetite when compared to corporate companies. Part of this conservatism may be linked to the history of land loss and struggle for Treaty of Waitangi settlements that many iwi have experienced. However, we are now seeing the maturing of Māori organisations, and the application of debt has fuelled growth in these uncertain economic times.
In the case of the entities on the Māori index in the 2023 Deloitte Top 200, we’re seeing debt financing for strategic growth used as a powerful tool among the most highly ranked business entities. Low-interest loans, lines of credit, and other debt instruments enable them to invest in revenue-generating portfolios - especially property, which we’ve seen increase throughout 2023.
Ngāi Tahu takes the top position once again, with total assets exceeding $2.2 billion and $1.77b in total equity. Waikato Tainui, with growth attributed to the success of Ruakura inland port and super-hub, has maintained its number-two spot, very closely following Ngāi Tahu in both total assets and equity. Ngāti Whātua ki Ōrākei has held steady at number three.
The big movers are Ngāti Toa, from the Wellington region and the top of the South Island. They were the 2023 winners of the Institute of Finance Professionals “debt deal of the year” award, and have moved from eighth to fourth position. The deal saw them exercise Treaty settlement options to buy 40 schools backed by Government leases. While the iwi took on $368 million of debt to complete the transaction, as an inter-generational investor, it puts future generations in a strong financial position to benefit from its Treaty settlement.
By embracing collective ownership, engaging with iwi investment funds, leveraging Government support and approaching debt financing with cultural sensitivity, these enterprises are successfully navigating the dynamic business landscape. Their approach to capital structure stands as an example of how financial decisions can be rooted in cultural values while fostering economic prosperity for both their communities and the broader New Zealand economy.
Lee Gray is lead partner — Hourua Pae Rau, Deloitte.
