No application received from dairy farm buyer

WELLINGTON: The Overseas Investment Office has not yet received an application from the reported buyer of Harvard University’s 5500head dairy farms in the South Island.

US private equity firm KKR & Co was reported by Bloomberg as being close to making a $US70 million ($NZ97.2 million) purchase of 3440ha of dairy farmland pending regulatory approval to scale back the Ivy League university endowment fund’s exposure to natural resources.

The deal would reportedly take months to complete, and OIO approval was seen as a slow process for foreign buyers.

Harvard bought the Big Sky Dairy Farm properties in 2010 for about $32 million out of receivership, after what was Central Otago’s biggest dairy farm operator defaulted on payments in 2007 before being placed in liquidation two years later.

The university based in Cambridge, Massachusetts, has held about 10% of its $US35.7 billion endowment fund in natural resources, built up by former Fletcher Challenge executive Andy Wiltshire who left Harvard Management Co last year.

Among those investments is New Zealand’s central North Island Kaingaroa forest.

Accounts for the dairy farms filed with New Zealand’s Companies Office show the operation’s total assets were valued at $99.2 million as at June 30, 2016.

This included $73.7 million of property, plant and equipment, $6.5 million in biological assets, and $10.8 million in investments.

The majority of investments were Fonterra Cooperative Group shares.

The holding company, DF1, reported a loss of $4.5 million on revenue of $12 million in the 12 months ended June 30, 2016.

The prior year, DF1 posted a loss of $15.6 million on operating revenue of $5.3 million during a sharp downturn in the sector when global dairy prices plunged, squeezing farmgate milk prices for suppliers. — BusinessDesk