By Deborah Hill Cone
Friday 16th May 2003
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"I think it is just something that does need saying you can invest very successfully in New Zealand."
Following last week's NBR story about tax exiles, the normally publicity-shy Mr Masfen was prompted to speak out about his own experience of investing here.
"I'm not in any way criticising why other people have gone but there are opportunities here that people seem to overlook," Mr Masfen said.
Mr Masfen led the transformation of Montana Wines from local winemaker to a $1 billion international business.
It would have been easy for him to have relocated to Europe, or anywhere else, when Montana was taken over by UK liquor giant Allied Domecq in 2001 and his shareholding was bought out for $202 million.
But Mr Masfen decided to stay in New Zealand, putting his significant fortune to work in a diverse range of investments from listed companies to commercial property and the energy sector.
He feels passionately that New Zealand is an attractive place to invest as well as to live.
Mr Masfen (61) said a big reason for staying was being close to his family, his many friends and his home base. He said he had a beautiful property in the Bay of Islands and had just brought a significant sheep and cattle venture in the South Island, which will to continue to expand its farming operations.
"The ability to share those things with one's family is something special."
New Zealand had been a fantastic place to invest over the past three years with high real interest rates, an appreciating currency, increasing value of real estate and one of the best performing sharemarkets in the world, Mr Masfen said.
With a portfolio of directorships including a longtime position on the board of insurance and investment giant Axa Asia-Pacific, Mr Masfen has a unique vantage point to observe the investment scene. He was actively involved in investing in property and equities before selling his Montana stake.
"My comments come from a lifetime of investing," Mr Masfen said.
Some of the companies in which Mr Masfen invested that had yielded particularly good returns included Cavalier Corporation, Ports of Auckland, Auckland International Airport, Sky City, Fisher & Paykel Appliances, Fletcher Building and Property For Industry, which he chairs.
Mr Masfen said he had made a 300% return on his investment in Cavalier, while PFI had boasted 18% growth every year for the past three years although it got little media attention despite such impressive returns.
"These are companies we have invested in and have been very happy with, and continue to invest in because they meet the criteria we adopt," Mr Masfen said.
Although some of the companies such as Cavalier were relatively small, they were going to provide the future expansion of New Zealand's economy. "That's where the growth is going to come from."
Mr Masfen said he did not wish he had done anything differently to have kept Montana New Zealand-owned, as he was pleased it could foot it in the international market.
He thought Allied Domecq was a good owner, which had been able to add strength through its distribution network and had kept a large degree of autonomy for the company here.
"My only regret is that, although all the shareholders in Montana did very well in that takeover, the ownership is now offshore and that New Zealanders can't [easily] be an investor in the company."
(They can invest in UK-listed Allied Domecq but Montana itself is no longer listed on the New Zealand Stock Exchange.)
Masfen Group has also backed unlisted companies such as Mark Dunphy's Greymouth Petroleum, which bought two producing Taranaki oil and gas fields from Shell Petroleum and is actively expanding its exploration programme.
And although Mr Masfen said he could not give details about his South Island farming venture, it was very exciting to be involved in something which, like Montana, involved developing a company from New Zealand's natural resources.
"When you go through that sort of experience I think it weds you to New Zealand a little more. It's one of the reasons we're still here it's given us a desire to invest in similar activities."
Changes to the Stock Exchange "can only be positive for our own market here" but there was a lost opportunity in the government's super fund.
"It's a tragedy that the fund did not have built in its charter that a certain amount must be invested in New Zealand, say 50%. It would have been a wonderful opportunity to have added depth and strength to our capital markets here."
Mr Masfen finds it hard to understand why people focus on offshore markets, in some cases almost to the exclusion of New Zealand.
"The obsession with investing offshore has just puzzled me when the returns in New Zealand have been so attractive."
Mr Masfen said people were quite understandably concerned about New Zealand's international competitiveness in some areas but he said other countries had their own major problems, such as the unfunded pension liabilities in Germany and the US.
"For some companies the unfunded liability for their pension schemes is half or more of their value," Mr Masfen said.
He understood some people were frustrated with red tape and compliance costs on business but he urged them not to let it dominate their thinking.
For example, Mr Masfen conceded he was not happy about the increase in the top personal tax rate to 39c, higher than the company tax rate "that was a retrograde step" and supported lower tax rates.
"But I take the attitude that you just got on with your business irrespective of what legislators are doing."
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