A place for Chinese investment

ANZ's David Green. Photo / Supplied

ANZ's David Green believes New Zealand needs to hold a much more open and balanced debate over Chinese investment and "work out what we want".

Green, managing director Institutional of ANZ New Zealand, believes China is a natural place for New Zealand to use to secure capital.

He notes one of the areas which is attracting considerable Chinese interest is investment in infrastructure. "New Zealand has a significant pipeline of projects coming up, and the Canterbury earthquake has increased the capital expenditure required here and the demand on the public sector."

Green points out the China market is rapidly growing, resulting in additional liquidity for investment outside its own country ... "the dynamics are well understood".

"It's natural that China might direct some of its capital here and I would have thought that we would welcome it," he says. "Anything that brings forward the delivery of infrastructure improves the productivity of our economy and also the standard of living for New Zealanders."

There has been considerable controversy over prospective Chinese investment in the primary sector and land. But Green stresses the positives. "There's an opportunity for increased productivity to realise the potential of the economy."

While high-profile deals over agricultural assets like Bright Dairy's acquisition of a controlling stake in South Island dairy company Synlait are well known, there has also been interest around forestry.

Green says small deals are also being done by private individuals who are interested in the New Zealand story. Pricing and conditions are not the drivers - it is more the ability to see value in the underlying demand for the product.

The recent Agria/New Hope acquisition of a control stake in PGG Wrightson has evolved into a new alliance involving LIC and Ngai Tahu with the Chinese investors working in with the local investors.

Green points out that Chinese companies are not just looking at buying potential assets, they are also talking to potential NZ partners who might bring local management skills and the possibility of consolidation.

"There are certainly a lot of conversations occurring, and building of networks," says Green. "They need some certainty about what the New Zealand appetite is for foreign investment, particularly from Chinese investors."

Green believes one opportunity for a collaboration with Chinese capital could be to fund future irrigation projects to increase the productivity of farming.

"That requires capital but where's it going to come from?"

Options would be to find outside investors, investment from within the rural sector, or have the Government play a role.

"We need to have a broader debate, rather than over ownership of land, that changes the way in we feel about foreign investment."

On the infrastructure front, he says it will be difficult to fund all the current pipeline, unless New Zealand can find a way to generate capital.

ANZ signed an MOU with China Development Bank last year. "We see them as a natural financier in that space. They are a natural provider of long term debt into infrastructure projects.

"They also have Chinese customers across a wide range of industries who they are looking to follow down here in terms of financing - and we're looking at providing the local banking facilities foe their customers in this market."