19 December 2012
The Harvard Management Company, managers of Harvard University's endowment fund, has reduced its shareholding in Kaingaroa forest. Canada's C$64.5 billion Public Sector Pension Investment Board will take a 30% stake in the 178,000 hectare forest, while the NZ Super Fund has lifted its share 1.25 percentage points to 41.25%. Harvard Management will retain a 28.75% stake. No price was disclosed, though the NZ Super Fund valued its 40% share at $954 million as at June 30, indicating Harvard's previous 60% stake was valued at about $1.43 billion, says National Business Review.The Super Fund was keen on lifting its stake in the forest and was looking at ways to buy out Harvard earlier this year, having acquired a minority stake in the timberlands for some $300 million.
The Canadian fund sees the 178,000 hectare Kaingaroa estate as an "attractive asset" that has been "very successfully" managed by Timberlands for many years, spokesman Mark Boutet said in a statement quoted by TVNZ.
Among the reasons cited for the investment, Boutet said "there is a strong local domestic softwood processing industry as well as good access to Asian export markets" and that "New Zealand's central North Island has some of the best growing conditions for softwood plantations."
PSP Investments, which manages C$64.5 billion pension fund for Canada's public service, the Canadian Forces, the Royal Canadian Mounted Police and the Reserve Force, bought the stake from Harvard Management Company, which manages Harvard University's US$30.7 billion endowment fund.
The Canadian fund also sees it as attractive to partner with Harvard Management Company and the New Zealand Superannuation Fund.
"Timber assets are attractive assets for investors with a long-term horizon such as PSP Investments," Boutet said. "They bring further diversification to the portfolio and are a strong complement to traditional asset classes as timber exhibits significant inflation-hedging characteristics and provides strong risk-adjusted returns."
Rotorua-based Timberlands will continue to manage the estate, and the underlying land remains owned by local iwi.
Sources: TVNZ and National Business Review