Ngai Tahu takes direct stake

CHRISTCHURCH: Ngai Tahu Capital has taken a direct stake in PGG Wrightson, ending a sevenyear relationship with Singaporedomiciled Agria as the foreign investor’s grip on the rural services firm remains uncertain.

Last Friday, the investment arm of the South Island iwi ended an agreement that pooled its investment in Wrightson with Agria and Chinese agribusiness New Hope International. Ngai Tahu Capital was a junior partner in the joint venture with a 7.24% stake. At the time, it touted the $15 million investment as diversifying its portfolio and building international relationships.

Ngai Tahu has taken direct ownership of 27.4 million Wrightson shares, or 3.6% of the company, worth about $14 million at the current 51c share price. No consideration was paid, documents lodged with the stock exchange show.

The dilution of the joint venture means Agria and minor partner New Hope own 46.6% of Wrightson.

The future of Agria’s Wrightson stake is up in the air, with the Overseas Investment Office reconsidering whether it meets the ‘‘good character’’ requirement. The OIO started investigating the stake after the US Securities and Exchange Commission launched a probe into Agria.

Last week, Agria and its executive chairman Alan Lai settled fraudulent accounting and market manipulation claims brought by the SEC, without admitting or denying the charges. Both have been cooperating with the OIO’s probe and Wrightson has a committee of independent directors set up to assess whether there will be any fallout for the company.

Agria first bought into Wright son in 2009, helping bail it out from taking on too much debt in the failed merger with Silver Fern Farms. At the time, the OIO cleared the investment on the grounds that it would create or protect local jobs, boost export receipts, and also included an offer to sell riverbed and foreshore to the Crown.

It also included a research and development cooperation agreement to invest in and establish international joint ventures.

When Agria set up the joint venture with Ngai Tahu and New Hope to take control in 2011, the OIO approved it on the grounds that it would boost exports, introduce new technology or business skills to New Zealand, and that the involvement of a key person in an industry of another nation would benefit New Zealand. The earlier investment was also a factor. — BusinessDesk