Lochinver decision due at 11am amid reports Pengxin's bid rejected
By Suze Metherell
Sept. 17 (BusinessDesk) - The decision over Shanghai Pengxin's application to buy Lochinver Station is expected to be released at 11am, with media reports the government has scuttled the proposed $71 million sale to the Chinese investor.
In 2014, Stevenson Group, the concrete, quarrying and engineering firm that owns Lochinver Station, sought buyers for the 13,843 hectare farm before settling on Shanghai Pengxin. Since then, the diversified investor, owned by Chinese billionaire Jiang Zhaobai, has been waiting on approval from the Overseas Investment Office for what would be its largest purchase by acreage, if not by value, following its purchase of the 8,000 ha Crafar farms and a controlling stake in SFL Holdings, which bought 4,000 ha of Canterbury farms from Synlait Farms.
While Lochinver has a rateable value of more than $70 million, the purchase price hasn't been disclosed.
A spokeswoman for Pengxin said an announcement from minister of land information Louise Upston and associate finance minister Paula Bennett was due at 11am. The decision on whether the government had approved the deal was embargoed until then, although the New Zealand Herald has reported the deal has been rejected because Pengxin could not show it would add more value to the assets than a hypothetical local buyer.
Gary Romano, chief executive of Pengxin International, and Mark Franklin of Stevenson Group could not be reached for comment.
The Stevenson family has owned Lochinver for 60 years but started as a drain-laying business in 1912, expanding into quarrying and construction in the late 1930s, and making concrete blocks from 1946. The original 5,260 ha Lochinver farm was acquired in 1958 and the family expanded to 16,595 ha "breaking the wild country into farming land" with "an enormous amount of hard work."
Set up in 1997 as a commercial property developer, Shanghai Pengxin began diversifying into agricultural assets in 2005. According to the website of its Milk New Zealand subsidiary, it now controls more than 12,000 hectares of land in South America, Cambodia and China, farming wheat, corn, soybeans and sheep.
It said the company wants to utilise its contacts to help the New Zealand dairy industry sell into China and may in time become involved in exporting non-dairy products from New Zealand too.
Milk New Zealand reported an increased profit of $32.8 million in December for the year ended June 30, 2014, up from $11.1 million a year earlier. It has signed a supply and purchase agreement with Miraka for ultra-heat treated milk.
Through its farming operations, Milk New Zealand owns shares valued at $23 million in dairy cooperative Fonterra and $827,569 in fertiliser cooperative Balance Agri-Nutrients.
Jiang, ranked 91 on the Forbes Rich List with estimated wealth of US$1.7 billion, has also bought commercial properties and invested in a number of tourism assets in New Zealand.