Looking ahead

The task for iwi and hapu of delivering sustainable distributions while continuing to grow their commercial asset base within an acceptable level of risk is a job far easier said than done.

ANZ head of Maori relationships David Harrison says it is easy to sit back from an independent position and compare and contrast the various iwi/hapu approaches.

But the enormity of the challenge, and the responsibility going with it, was certainly not lost on him.

In a ‘‘Looking Forward’’ opinion piece in the bank’s Te Tirohanga Whanui report, Mr Harrison said there were five elements of the varied investment approaches he had observed that stood out as sound practice.

Settle on a simple, effective structure: Consolidate and manage commercial assets in a commercial holding company. Those with the benefit of time had more chance to consolidate their assets and the majority of top performers had assets in a single holding company or group.

Add detail to the investment strategy: Have a ‘‘Statement of Investment Policy Objectives’’ encompassing all asset types, including nonfinancial assets. Add detail of longerterm goals and asset allocation, and expected returns by asset class, and consider inflation adjustments. Review regularly.

Manage distributions: Formalise a distribution policy to manage the expectations of the parent entity and allow for reinvestment of commercial returns to help compound growth for future distributions.

Collaborate around deal flow and due diligence: As iwi shifted to more active direct investments, the search and assessment of potential opportunities could be onerous. Similar investment objectives, philosophies and time horizons were good foundations for coinvestment. Collaboration could help groups find and access deals not possible on an individual basis, and allowed groups to share resources during the due diligence process.

Leverage assets: Formalise a borrowing policy with consideration for the different types of investment that might need bank funding. Most iwi had capacity for more borrowing and the use of some bank debt could help increase acquisition options, raise returns on equity and accelerate growth.