NZ Super Fund mulls Harvard's stake in Kaingaroa forest
The New Zealand Superannuation Fund, which was set up to pre-fund the pension liabilities of the baby boomer generation, is in talks with Harvard University's endowment fund manager to take full ownership of the Kaingaroa forest estate.
The so-called 'Cullen' Fund, named for its architect Michael Cullen, and global investment firm GMO Renewable Resources are in discussion with Harvard Management Company "over the possible purchase of Harvard's majority stake" in the forestry assets, the pension fund said in a statement.
The Harvard fund, with some US$32 billion of assets, owns 60 percent in the 170,000 hectare estate in the Central North Island, with the NZ Super Fund holding the remainder, which it bought in 2006 for $300 million.
Kaingaroa is the super fund's biggest single investment, and part of its $1.26 billion timber investments, which include international timber holdings.
The forest estate was singled out as one of the fund's best performing investments in the 2011 financial year, generating taking almost $3.5 million in its share of profits.
The Harvard endowment portfolio made an 18.8 percent return on its natural resource portfolio in the last financial year ended June 30, which included the cutting rights to Kaingaroa forests. The overall portfolio returned 21.4 percent for the period.
Harvard’s fund holds about 10 percent of its assets in natural resources, which it says is mostly timberland and agricultural and other resource-bearing properties on five continents.
The natural resources portfolio has been built up during the last decade by Andy Wiltshire, a New Zealander who started his career with the New Zealand Forest Service, the developer of the Kaingaroa plantation forest in the central North Island. Wiltshire is head of external management for Harvard Management, the fund’s manager.
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.
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