Maori investment: The sleeping giant wakes

Mark Solomon, Ngai Tahu leader. Photo / Getty Images

Ngai Tahu chairman Mark Solomon reveals the powerful South Island iwi is considering establishing a two-tier share structure so individual members can take stakes in their rapidly growing company.

"The A class will be owned by the tribal collective and the B non-voting class will be owned by the individual and we will invest in our own companies to make us a reasonable return," says Solomon. "We're also looking at other vehicles where we can bring other iwi on board."

Over time he expects that could lead to the opportunity for other investors including institutions and smaller shareholders to co-invest alongside the Ngai Tahu collective.

Solomon says Ngai Tahi is also poised to take stakes in prime state-owned enterprises it they stack up as good investments.

But Ngai Tahi will do a full due diligence - including examining whether the profitability of power companies like Meridian will be adversely impacted by climate change - before making a final decision.

"It is a risk ... but we have raised it with the Government as an opportunity," says Solomon. "In fact we did that on the Friday after the election and they said they would put it on the table for discussion going into the second election."

Solomon's stance is underlined by Finance Minister Bill English who told last week's Maori Economic Summit that there will be opportunities for Maori enterprises to benefit if National is re-elected and goes ahead with its proposal to partially privatise state assets like Genesis Energy, Meridian, Mighty River Power and Solid Energy.

NZ Super Fund chief executive Adrian Orr expects the fund to undertake more co-investments with Maori entities.

"At a high level it seems to be a match made in heaven," says Orr. "You've got 'asset-rich cash-poor' on one side with these Maori organisations and a fund like ourselves 'cash rich asset poor'.

'We're both here to stay. We've both got inter-generational wealth aspirations. On the face of it 'Yin and Yan' should be able to make it happen. It's a pretty exciting opportunity.

"But once you get down to ground level it's pretty complex."

Last week's summit spent considerable time probing just how to overcome problems of leveraging the Maori asset base, much of which is held in trust hands.

The summit was underpinned by a new report on the asset base of Maori enterprises which Berl estimates is now worth at least $36.9 billion. It also estimates the Maori economy produces about 5 per cent of New Zealand's production GDP equating to just over $10 billion each year.

BERL chief economist Ganesh Nana says Maori enterprises need to find new ways to collaborate and innovate if they are to realise their potential. Nana predicts the Maori sector could create another 150,000 jobs by 2060 by investing in science and innovation and a collaborative approach to investing.

"We get economies of scale. We can start investing in science and innovation. We can start investing in adding value and marketing ourselves, whether it's putting brand Maori or brand New Zealand on the products and services we sell so we can actually start reaping the benefits of those price premiums," Nana adds.

In an earlier report, Berl characterised the Maori economy as a "sleeping giant about to awaken."

While conversations about the Maori economy usually focus on the 3Fs - fisheries, farming and forestry. Maori control up to 37 per cent of NZ's domestic fishing quota; own around 36 per cent of pre-1990s forests, and, have an increasing footprint in farming.