Flash Marketing of City a Waste

ALAN WOOD     The Press

A focus by Christchurch's earthquake rebuild team on a campaign to attract investors to the city has drawn criticism from Ocean Partners, which says money should not be wasted on "flash advertising".

A focus by Christchurch's earthquake rebuild team on a campaign to attract investors to the city has drawn criticism from a boutique investment bank, which says money should not be wasted on "flash advertising".

The Canterbury Earthquake Recovery Authority (Cera) is seeking international investment for the quake-damaged city, and has issued a tender document outlining the need for a group able to lead a complex marketing strategy.

However, the search for a marketing-based group with a budget of up to $750,000 has drawn criticism from Tim Howe, of Ocean Partners, who says the money will be wasted on glossy marketing.

Instead, Cera and its city subsidiary, the Christchurch Central Development Unit, should be working with known investors on incentives or partnership opportunities to bring them into the city rebuild, he said.

CCDU director Warwick Isaac has already been overseas talking to Australians as potential investors for the central city rebuild.

In May he and CCDU investment manager James Hay flew across the Tasman to talk to Australian banks, investors and advisers about the city's earthquake recovery projects.

Last week Cera issued a "request for proposal" or tender for a CCDU investor campaign, which said they needed a multi-faceted marketing strategy to enable CCDU to attract investment.

"The campaign will target national and international investors, funders, insurers and reinsurers and local, national and international businesses looking to set up or who are already operating in Christchurch," the proposal said.

"We also need to 'market' the central city to local residents as a place they will want to live, work, shop and play in."

The rebuild of wider Christchurch has been estimated as costing up to $30 billion, with Isaacs saying it is well recognised the necessary funds would have to come not only from insurance but central and local government and private investors.

Hay said on Friday that CCDU was calling for proposals from individual companies or a consortium to design and implement the marketing strategy to focus on investment.

He said that the campaign needed to attract interest from a range of investors and potential funders, both national and international, and be wide enough to garner interest from existing and new business.

Canterbury accounts for 15 per cent of gross domestic product and 10.5 per cent of the country's population.

Howe said Ocean Partners had in the past 15 months connected with international investors, institutions and sovereign funds, considering an investment in Christchurch.

There was no shortage of investors but the city's vision needed to stack up economically to attract capital.

The vision would partly be delivered through CCDU's blueprint for the city to be delivered on July 27, but other enticements should be offered, Howe said.

"Raising capital in some ways is something done by a small number of people and advisory firms ...

"We're not sure that any campaign by an advertising or associated firm is going to help bring those parties, already looking at this opportunity and waiting for substance, any closer to making a decision to invest."

Existing investors in the city that had received payouts for property damage, would need "some degree of certainty and transparency" before they reinvested capital in that same market rather than somewhere else.

"Those parties don't want a flash advertising campaign ... they just want to understand what is on offer in the city, what will incentivise them by way of either depreciation changes or tax changes or what incentives are going to be offered to them to introduce capital here." 

Ocean Partners Promotes Competition with Oceania Dairy

Oceania Dairy - Ocean Partners

Dairy farmers are joining up to one of the South Island's latest start-­up milk powder production businesses.

Oceania Dairy Group plans to build a milk ­processing plant near Glenavy in South Canterbury on the north bank of the Waitaki River.

It has secured over half the required milk supply to meet its targeted threshold with farmers in the area showing "good keen interest to date", Oceania acting chief executive Paul Park says.

The $100 million dairy plant is on track to meet its capital raising target and planned 2011 plant commissioning. With the $74 million capital ­raising project effectively complete, Park is confident the capital target will be achieved.

And that is without any involvement with the Hong Kong­ listed Natural Dairy New Zealand headed by May Wang.

"We do not have any involvement with the Chinese (Natural Dairy)," Park confirmed.

Oceania Dairy will incorporate a new style of ownership as it builds its company around a model that farmers find attractive for direct investment in the plant and the farms with a strategy to vertically integrate and own both farms and processing.

Oceania opened its capital­ raising in December with the offer of 23 million shares for subscription, representing 88.46% of the company. Ten million of the new shares were available to financial investors at $3.25/share during the offer period with 13 million shares available to Waimate district farmers at either $3.25 during the offer period or $4.25 through a deferred payment arrangement.

The offer period was initially to close on March 15 then was extended into April. As this story went to print the offer had closed off but Park was unable to give details on how much had been raised and from whom.

The objective in the capital raising is to maximise earnings for investors and provide farmers with an opportunity to participate in the entire value chain from the grass to the sale of milk powders in international markets. The minimum investment is 160,000 shares representing $520,000. Allotments to financial investors would be made on a first ­come, first­ served basis with farmer investor allotments based on the length of the supply agreement entered into with Oceania Dairy.

Over and above the $74 million capital raising a further $25 million will be required for plant construction with the total project cost around $100 million.

Initially launched as the NZ Milk Company (NZM), Oceania Dairy changed its name after bowing to pressure from dairy giant Fonterra that opposed the NZM name. The new name reflects the countries of NZ and Australia to the export markets of Asia.

Oceania Dairy Group is headed by former Meridian chief Keith Turner with former Reserve Bank governor and National Party leader Don Brash a director with the four strong director line ­up also including Park of Christchurch ­based merchant bank Ocean Partners and Tim Howe, also of Ocean Partners. Ocean Partners has been the force behind facilitating the $100 million milk powder plant.

The Oceania business model is likened to a replicate of Fonterra's failed restructuring bid. The model plans to include a holding entity for the farms and a holding entity for the plant and ultimately floating a holding company that farmers can have a share in.

In effect the milk powder processing facility would be largely owned by farmers with the new company also looking to acquire farms that would become suppliers to Oceania Dairy.

Listing on the NZ Stock Exchange was an option likely to be explored down the track but right now the focus is on putting the business into an ultimate structure that will put value back to the shareholders.

The Waimate district was chosen because of a high concentration of dairy farmers and a large number of dairy conversions. The milk prices offered to farmers would be "competitive". The company expects a good portion of new suppliers coming on board but also to attract some parties to sign up through preference of choice. The aim is to concentrate supply within close proximity of the plant.

Ocean Partners had been looking for 18 months to realise the opportunity the investment company had identified to offer alternative solutions for milk producers. Several options were explored in the North Island with Southland also considered.

"But for us the heartland of dairy is in the South Canterbury and North Otago regions for what we want to achieve ­ water, land and production opportunity, it's all there.

"The project is not about taking on the giants or taking supply from anyone else. It is about people having the choice to take control of their business. We will concentrate on a small area and do it well from start to finish."

Much confidence for the new venture initially came from the United States Department of Agriculture's forecast (2009) of 1.5%­2.5% annual growth in supply on top of a 2.5%­3.5% increase in demand for dairy product.

"We see opportunity coming through for NZ to capitalise as the ultimate producer of whole­milk product. The world is looking for it and NZ can provide it."

Construction of the plant is scheduled to begin mid­2010 with the plant commissioning in August, 2011.

This is well on track with the company last month granted resource consent for the proposed milk plant, a milestone that came at a critical time as the company finalised its capital and intensified its drive to secure milk supply. The consents were approved for a 35­year period by the Canterbury Regional Council and the Waimate District Council.

While options for size and capacity of the plant were still being evaluated, indication leans towards the plant boasting an eight­ tonne dryer capable of manufacturing 32,000 tonnes of commodity product annually using 18 million kilograms milk solids.

The company acknowledges it is a big decision for farmers to put their livelihood in the hands of a new company.

"We are taking that responsibility very seriously and spending time with farmers as we work to ensure we can deliver on our promises to farmers."

Fonterra Forces Change in Name of Start Up Dairy Company

Don Brash and Keith Turner’s dairy start-up, formerly named The New Zealand Milk Company, has been forced to change its name to Oceania Milk after Fonterra threatened it with legal action.

AJ Park, acting as the IP lawyers for Fonterra, issued a cease and desist order against the then New Zealand Milk Company (NZMC) over the usage of the term New Zealand Milk which Fonterra has trademarks to.

Fonterra has said that it has significant investment and goodwill built up over the years in the names New Zealand Milk, NZM and New Zealand Milk Products, and can’t have competitors trading off that goodwill.

Chairman Keith Turner says the company probably had a good chance of defending its name, but can’t afford the $50,000-100,000 in legal fees required to challenge Fonterra.

“We feel that a legal battle at this early stage of the company’s existence will be unhelpful, expensive, and not provide a legitimate return to our shareholders. We’re a small company, they’re a big one,” he says.

IP law firm James and Wells’ partner Ceri Wells says the company would probably have a good basis for defending their right, as the term “New Zealand Milk” is a common generic descriptor, and could probably be overturned.

The new name, Oceania Dairies, is an attempt to recapture the original name’s modus operandi – to provide cheap quality New Zealand milk.

NZMC plans to start build a $20 million factory at a site in Glenavy, South Canterbury and is going through the resource consent process.

It plans to have its first production season in 2011-2012, says director Tim Howe.

The finalised structure of the company is yet to be defined, but the focus at this stage appears to be on a vertically integrated operation.

There has been substantial interest from third party private equity and farmers alike, Mr Turner says.

The company has not begun capital raising as of yet, and is still working on its business case.

Mr Turner would not rule out an eventual listing, but says it’s too early in Oceania Milk’s life to make any definitive long-term calls.

Other than the cease and desist, Fonterra have not made any untoward actions against the company, and Mr Turner says they are concentrating on getting the venture up and running before worrying about the competition.

“We aren’t looking at cannibalising market share from any of the over dairy operators in South Canterbury, and are focusing on growth milk,” he says.

Ocean Partners becomes an NZX Member


NZX welcomes Ocean Partners and Aspiring Wealth Management to the NZX Firm network following the successful completion of the NZX Advising Firm accreditation process.

Both new NZX Firms are South Island based, Ocean Partners in Christchurch and Aspiring Wealth Management in Wanaka. there are now 23 accredited NZX Firms across New Zealand.

An NZX Advising Firm can advise clients about securities listed on any of the markets provided by NZX and bring, underwrite and distribute new issues of securities in any of the markets provided by NZX.

NZX Markets Development Manager, Geoff Brown said, "In recent years there has been a decrease in overall NZX Firm numbers as consolidation has taken place in the industry, with a number of smaller firms merging with larger retail brokers.

“Now we are seeing new firms joining the network with new business models and niche service offerings to companies and investors, we welcome this change in positioning for new NZX firms.”

Aspiring Wealth Management specialises in wealth management and investment advisory services to individual investors and their families. Ocean Partners services are directed to local and international companies that are seeking mergers, acquisitions, divestments or capital raisings in New Zealand.

Tim Howe of Ocean Partners said, “A listing on NZX Markets is a viable growth option for successful New Zealand companies seeking additional expansion capital or access to many of the other benefits that a listing brings. We are excited about our accreditation as an NZX Advising Firm which enables us to assist these companies in coming to market.”


For more information please contact: Lucy McFadden NZX Communications

First Five-star Hotel on the Cards for Christchurch


First five-star hotel on the cards for Christchurch with international hotel chain Hilton thought to be considering building a five-star hotel in the central city.

It would be the city's first internationally rated five-star hotel.

Christ's College confirmed yesterday it had been talking to a "major international hotel chain" interested in land it owns in Durham Street between Lichfield and Tuam streets.

The Press understands the hotel chain is the Hilton, whose Auckland hotel is the only one in New Zealand.

Consent has been granted for a $60 million Hilton in Queenstown.

Christ's College, which has owned the land for many years, has enlisted Christchurch merchant bank and advisory firm Ocean Partners to investigate the future use of the land, which has views of the Avon River and is near the Oxford Terrace Strip.

The 4000sq m block is home to businesses such as tyre company Beaurepaires and a car rental company.

But the existing tenancies were due to expire by 2011, Ocean Partners partner Tim Howe said.

"We're considering a range of mixed-use redevelopment options, including office space and a possible fivestar hotel, which would be situated at the northern end of the site," he said.


For more information, contact Tim Howe, on 021 350-141

Ocean Partners keen to ride wave of funding companies


A new local "boutique" investment bank is seeking investments in management buy-outs and company expansions, particularly in the South Island.

Ocean Partners, co-founded by former Ernst and Young partner, Tim Howe, is in the throes of raising nearly $30 million from local and Swiss-based investors for a new equity fund.

Howe said many family-owned firms existed where the children of the owners do not want to take over but the owners were considering retirement and wanted to cash up their businesses. Surveys showed that those firms' management were the ones with the ability to takeover when the owner left, but did not often have the capital.

An ANZ survey showed that 80% of businesses thought their management were the best people to continue the running the company. "We are about backing them and helping them into the business," Howe said.

Howe's partners are chartered accountant and business consultant Sarah Ott and business consultant Steve Surridge. Howe said between them they had more than 20 years advisory experience and had themselves been involved in the execution of a lot of transactions.

Ott said the investments they were targeting were between $5m to $25m. New Zealand had about 3500 firms with turnover of $10m to $150m, the ANZ survey showed.

Ott said Ocean Partners would not take a management role but a strategic advisory one. They say the $30m equity fund would enable then to borrow maybe another $70m to give Ocean Partners a war chest of $100m.