Hawke’s Bay Airport shares are among Napier City Council assets to be managed by a new Council Controlled Trading Organisation (CCTO) as the council tries to make better financial use of its resources.
But the prospect of a sale of any or all of
Napier assets moved to new council company - Ahuriri Investment Management
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“Private companies can have various agreements in place including how much each party can own and how shares can be sold.
“It is common for other owners to have right of first refusal for shares on offer.”
“If it is proposed that the shares are to be sold to a third party, then the other owners need to be in agreement to do so.
“As the airport has several owners, it makes it a complicated process to sell. Additionally, it is a strategic asset so would be subject to community consultation if sale were ever proposed.”
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The council agreed to establish Ahuriri Investment Management Ltd (AIM) earlier this year, to operate a long term investment portfolio to earn income for the city, reducing the need to rates-fund activities.
As well as the airport shareholding, other assets to be transferred will be Parklands development land, leasehold land and various other surplus properties.
The surplus land is 398 Prebensen Drive (excluding the portion that was formerly proposed to be a new Aquatic Centre site), the former Pirimai School site on Allen Berry Ave, the former hospital site at 11 Hospital Tce, 5 Tangaroa St and 111-115 Battery Rd.
AIM will manage the portfolio on behalf of the council, which at Thursday’s meeting prescribed the boundaries and expectations it has of AIM through the draft SoE to deliver a return to the city.
Additionally, a draft Statement of Investment Policies and Objectives (SIPO) was agreed to, including setting policies for ethical investing and council’s appetite for investment risk.
Mayor Kirsten Wise said Thursday’s decisions are an exciting step forward to seeing Ahuriri Investment Management start earning income for the city.
“I have said previously that we can’t keep doing things the same way and expect a different result,” she said. “I am proud of this council’s vision and boldness to ensure Napier is set up financially for the future.”
The draft SIPO lists industries or companies that AIM cannot invest in, including, but not limited to, gambling, weapons, tobacco and whale meat harvesting or processing.
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“As a council, we are mindful that we must be socially responsible investors. We have agreed to avoid investing in activities that would be regarded as unethical by most people in New Zealand,” said the mayor. “This was feedback we received loud and clear during our Three-Year Plan consultation earlier this year.”
Council’s appetite for risk is also set out in the draft SIPO. Ahuriri Investment Management Ltd is expected to exist permanently for Napier’s ratepayers. This gives it a long-term investment horizon, increasing council’s capacity to accept risk. AIM will target around 80% medium to high-risk investments, with the remaining 20% being lower risk.
“Just like when we save into our KiwiSaver, the further away we are from retirement, the better off we will be with higher-risk investments,” Wise said. “AIM’s investments will be medium to high-risk because it will be there for the long term. We need to balance this though, to enable AIM to pay dividends to council to help us fund our activities.”
Next steps will be to develop a director job description and appoint a recruiter for that role, and then appoint AIM’s board, with the company expected to begin operating from July 1 next year.
