Canadian pension fund buys into Kaingaroa

Harvard Management Company, which manages Harvard University’s US$30.7 billion endowment fund, has sold down its stake in the central North Island Kaingaroa forest in New Zealand.

Canada’s public sector pension fund is picking up the bulk and the New Zealand Superannuation Fund taking a small bite. Canada’s C$64.5 billion Public Sector Pension Investment Board will take a 30 percent stake in the 178,000 hectare forest, while the NZ Super Fund lifted its share 1.25 percentage points to 41.25 percent. Harvard Management will keep a 28.75 percent stake in the forestry company.

No price was disclosed, though the NZ Super Fund valued its 40 percent share at NZ$954 million as at June 30, indicating Harvard’s previous 60 percent stake was valued at about NZ$1.43 billion. 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 NZ$300 million.

Harvard Management natural resources portfolio, which accounts for about 13 percent of its assets, consists of timberland, agricultural land and other resource bearing properties. The asset class made a return of 2.4 percent in the year ended June 30, and has delivered an average annual return of 12.7 percent.

Harvard beat out China’s Citic to buy the Kaingaroa cutting rights from receivership in 2004. The price was not disclosed but it was believed to be near US$650 million. The same forest was sold by the Crown in 1996 for $2.2 billion. Rotorua-based Timberlands will continue to manage the estate, and the underlying land remains owned by local Kiwi. Source: Scoop

www.scoop.co.nz/stories/BU1212/S00727/canadian-pension-fund-likes-nz-forest-growing-conditions.htm