$100m Māori fund reaches the table

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An idea brewing for decades came to fruition last week as a coalition of 17 groups representing over 35 Māori organisations agreed to pour some $100 million into a collective investment pot.

All it took was “drinking thousands of cups of green tea”, according to Tama Potaka, New Zealand Superannuation Fund (NZS) investment hub coordinator.

Potaka, who joined NZS this January from Tainui Group Holdings, has been instrumental in stringing together formal agreement from 35-40 underlying entities to tip into the proposed Iwi/Māori Direct Investment Fund.

According to an NZS statement, the various “iwi, pan-tribal organisations, Māori land trusts and Māori incorporations” have committed up to $100 million to the project that will eventually find a home in five or so direct investments– primarily targeting ‘expansion capital’ opportunities in NZ.

The NZS along with Ministry of Business, Innovation and Employment, He kai kei aku ringa – the Crown-Māori Economic Partnership and Ngāti Awa Group Holdings have been driving the joint fund negotiations, which kicked up a gear over the last four months after the dream reignited at the November 2016 Sovereign Wealth Fund summit in Auckland.

While it was a “sprint to the finish”, according to Potaka, the concept of a pan-Māori fund – proposed at various times over the last few decades – has run more of an ultra-marathon. Championed in particular by Paul Quinn and Debbie Birch from Ngāti Awa Group Holdings, the current iteration – though not quite over the line – has gained legs as many iwi and other Māori trusts have hit their financial straps, Potaka said.

“For the past couple of decades Māori have talked about pooling assets. But now the timing has been good,” he said. “A lot of iwi now have settled [Treaty of Waitangi claims] and trusts want to get involved in new areas of investment.”

Potaka said the various entities involved may have different reasons for backing the venture – such as investment diversification or access to opportunities not available to small funds – but they were all equally enthusiastic about the potential of the proposed new structure.

With the paperwork due to be settled later this month, the Iwi/Māori Direct Investment Fund should be formally constituted as a limited liability partnership by December 21.

Before money starts flowing, however, the fund will have to establish a board (comprising representatives of underlying groups), appoint an independent investment committee and hire a general manager “probably on a part-time basis to start with”.

“Plus the aim is to have a young person – someone under 30 – on each committee,” Potaka said.

The NZS itself won’t have a formal role in the Māori fund structure, he said, but would act as an investment partner as appropriate deals come to light.

“We hope the [Māori fund] will be a preferred investment partner along with other institutional investors like NZ Super or the ACC fund,” Potaka said.

NZ Super may serve as a gatekeeper to local private equity deals that bypass smaller investors – note the fund’s recent purchase of a 40 per cent stake in Fidelity Life or its quarter share in Kiwibank – but he said offers may flow the other way too.

In fact, Potaka said he got to see first-hand the scale of investment opportunities in regional NZ during the intense round of pre-agreement meetings over the last few months.

“Māori expect to engage through face-to-face meetings,” he said. “That takes time and has some inefficiencies but you get to understand the aspirations of all the investors as well as seeing where the deal flows might be – there’s a lot going on in the regions.”

Real investments should start coming to the Māori Direct Investment Fund table early next year: it’s not clear yet whether a tea plantation will be among the contenders.

– David Chaplin, Investment News NZ

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