IWI EMPIRE $9b and rising
How Māori groups’ assets stack up
The combined wealth of the nation’s 75 iwi groups rose by $1.2 billion in the past year to almost $9b, says a new report on iwi holdings. The TDB Advisory Iwi Investment Report 2018 focuses on the financial performance of eight of the largest iwi, which among them represent about $5.5b of the total asset base.
All the eight iwi groups delivered positive returns for the year, although as the property sector has slowed, so has total growth.
Across the past six ¯years Nga¯i Tahu and Nga¯ ti Wha¯ tua Ora¯ kei stood out with reported average returns of 12 per cent a year and 15 per cent respectively.
But last year they delivered lower — though still solid — returns of 8.4 per cent and 7.9 per cent.
Nga¯ti Wha¯tua¯, in particular, is almost completely invested in property in and around Auckland, so it
Generally, the more active iwi have made better returns over the 2013-2018 period. But a more active approach involves greater risk. Phil Barry, TDB Advisory
is seeing investment returns slowing with the market.
The Raukawa iwi delivered the best return on assets in 2018, with close to 10 per cent.
Raukawa is based in south Waikato and its investment mix is dominated by managed funds and forestry.
In 2018, a strong performance from its Ka¯kano forestry investment helped push its return on assets above its sixyear average of 8.4 per cent.
The report — authored by Phil Barry and Zachary George-Neich — concludes there has been “a reasonably positive financial performance by the sector as a whole”.
However, over the past six years, only two¯iwi
— Nga¯i Tahu and Nga¯ti Wha¯tua Ora¯kei — had recorded an average return on assets above the returns of a benchmark portfolio (8.5 per cent), they said.
Raukawa had generated returns broadly in line with that benchmark portfolio and Nga¯ puhi, Nga¯ ti Awa, Nga¯ ti Porou, Tu¯ hoe and Waikato-Tainui had seen returns below the benchmark.
“Generally, the more active iwi have made better returns over the 2013-2018 period,” Barry said. “But a more active approach involves greater risk.”
In the report he notes some considerations which may account for the slower growth than other commercial funds.
Several of the iwi have relatively undiversified investment portfolios with few assets outside their rohe (traditional region).
“They are therefore heavily exposed to a single asset class in a narrowly defined geographic area.
“While there are often strong cultural and historical reasons for such a concentration in their portfolios, it is risky from a financial perspective.”
In other areas iwi are relatively riskaverse.
“A common feature of all the iwi is a low level of debt. Three of the iwi have zero debt and the remaining five iwi have a debt-to-capital ratio that is no higher than 17 per cent.”
The iwi also typically had limited access to new capital and had constraints on their ability to sell certain assets.
On the other hand, the report notes, “many iwi have negotiated first rights of refusal on certain Crown assets as part of their Treaty settlements and face the Ma¯ ori authority tax rate of 17.5 per cent.
“It should be noted that iwi trusts (as opposed to their commercial arms) have objectives that go beyond maximising financial returns. In order to achieve these wider social and cultural objectives, it is important that the investments held by their commercial arms perform to their maximum potential.”
The report presents returns for each iwi group as a whole and calculates them after deducting the respective trust’s operating expenditure.
The returns for the commercial entities of the iwi would be higher as they would include the distributions to the parent entity (the trust), the report notes.
“However, most iwi do not publish separate financial statements for their commercial arms. The returns may also be understated for some iwi who do not revalue upwards some assets — for example, Nga¯i Tahu holds significant amounts of seafood quota but does not include upward revaluations of the quota in its reported returns.”
TDB has worked closely with many of the larger iwi, advising them on their investment strategies, Barry said.
“These iwi are playing a more and more important role in the New Zealand economy, but their successes and strategies are not reported on often enough.”