The Fund has made a range of successful investments in New Zealand. These include Datacom, Kaingaroa Timberlands, Z Energy, Metlifecare, Kiwibank and Fidelity Life. We have also invested in residential property in Hobsonville and rural land across the country.
The Fund is a significant minority investor in Datacom Limited, holding 39% of the company. Datacom is a good fit for the Fund’s NZ Direct Strategy, with sought-after attributes such as a strong competitive advantage, favourable industry dynamics, a capable Board and management team, and compatible long-term shareholders. Its conservative balance sheet and long-term investment focus are well suited to the Fund’s approach as a long-term, growth-oriented investor. This investment is managed by the Fund's in-house team of investment professionals.
The Fund’s single largest investment is Kaingaroa Timberlands, in which we have a 42% stake. Covering around 178,000 hectares of planted forest, Kaingaroa is widely recognised as one of the world’s premier softwood plantations and is a major supplier of logs to the domestic and export markets. Our investment partners in Kaingaroa include PSP Investments and Kakano Investments, a collective of iwi groups which are also part-owners of the underlying land. The forest is managed by Timberlands Ltd, which is wholly owned by the Kaingaroa partnership, to Forest Stewardship Council certification standard.
The Fund has a 19.9% investment in Metlifecare, a retirement village operator listed on the New Zealand and Australian stock exchanges. Metlifecare operates 24 retirement villages primarily located in the Auckland, Tauranga, Hamilton and Kapiti regions. The retirement village industry enjoys favourable demographics and is a good fit with the Fund's long-term investing horizon and growth profile; we liked its alignment with our investment themes. This investment is managed by the Fund's in-house team of investment professionals.
In 2010 the Fund and Infratil purchased Shell's downstream assets in New Zealand and formed Z Energy, a transport energy company. Z supplies fuel to retail customers and large commercial customers like airlines, trucking companies, mines, shipping companies and vehicle fleet operators, along with bitumen to roading contractors. Following a period of increased capital investment, re-branding and a strong focus on improving customer service, Z successfully listed on the New Zealand and Australian share markets in August 2013. The Fund retained a 20% stake in the company. Thereafter, in 2015 and 2016 it completed two rounds of sales, successfully reducing its stake in Z energy by 38.9 and 36.4 million shares respectively. The Fund continues to hold a 2% share in the company. The shares are managed by its internal team, along with external managers Devon Funds Management and Mint Asset Management.
In late 2015 the Fund partnered with Ngāi Tahu Property and New Ground Capital to invest in a new housing development at Hobsonville Point, Auckland. Already an established and successful subdivision, the investment is an ideal access point for the Fund’s first direct property development.The NZ$113 million project will see 208 new homes developed by the end of 2018. Construction began on the site in early 2017. Kerepeti, as the development is now known, is located across two super lot sites totalling two hectares called Kerewhenua (111 homes) and Uku (97 homes). Each super lot will consist of a mix of apartments, terraced homes and walk-up apartments, with around 70% of the properties priced under the Auckland median house price and 30% of the properties priced at $600k or less. The Fund will be contributing 48% of the capital required for the development.
Rural Land Portfolio
In 2010 the Fund began to build a portfolio of rural land investments. We see rural land as a relatively under-developed asset class delivering a range of investment exposures and being a good diversifier for the Fund. Our local farms, located in Southland, Waikato, Otago and Canterbury, are managed by FarmRight. A key focus on all farms is ensuring Health and Safety and Environmental systems exceed legal requirements, and that significant capital is invested to upgrade effluent systems in particular. In late 2017 we made our first offshore rural investment, taking a stake in leading Australian beef stud Palgrove. We are continuing to consider opportunities offshore and in other rural sectors locally.
The Super Fund holds a 25% stake in Kiwi Group Holdings, the owner of Kiwibank. The investment, settled in October 2016, also saw ACC take a 22% stake, with NZ Post retaining a 53% majority shareholding. Kiwibank has grown quickly since inception in 2002. Now New Zealand's fifth-largest bank, it has built a leading brand, has a customer base in excess of one million and a market share of 12%. It also possesses one of the highest quality mortgage books of the New Zealand banks. We see Kiwibank as a rare large-scale investment opportunity in New Zealand, with a lot of potential for further growth. As an investor with a long-term view, strong financial expertise and available capital, we believe the Fund is in an excellent position to help Kiwibank achieve its long-term promise. The investment is managed by the Fund's in-house team of investment professionals.
In early 2018 the Fund finalised its investment in Fidelity Life, New Zealand’s largest locally-owned life insurer. The transaction saw the Fund take a NZ$100 million, 41.1% cornerstone stake in the company. Founded in 1973, Fidelity Life provides life insurance products for individuals, businesses and employers via a network of 2,700 independent financial advisors, as well as through strategic alliance partners. In 2017, Fidelity Life paid out more than $105 million in claims to its customers, and was named Life Insurance Company of the Year. We see our investment in Fidelity Life as a rare opportunity to take a significant direct stake in a well-respected New Zealand company. The investment is managed by the Fund's in-house team of investment professionals.