About $100 million has been pledged to a new Iwi/Māori Direct Investment Fund. The NZ Super Fund’s Tama Potaka explains the ‘mahi tahi’ behind the initiative, which has received indicative commitments from over 35 iwi and Māori groups.
With more than $15 billion of assets and investments currently under management by Māori collectives, and the size of the Māori economy estimated at more than $50b and growing quickly, iwi and Māori groups have a substantial – and increasing – economic power base.
But there are challenges of fragmentation and concentration. That $15b of assets and investments is spread across many different groups and it is heavily concentrated in traditional sectors; farming, fishing and forestry, with some under-utilised assets in need of investment.
In this context, mahi tahi – collaboration and working together – has great potential benefits. In particular, it means Māori investors can access bigger and potentially better quality investment opportunities, and a greater range of investment opportunities, than they could individually.
Collaboration amongst Māori investors isn’t new. There are numerous bilateral and multilateral joint ventures involving Māori groups. Iwi and Māori are the majority owners of businesses such as Miraka (dairy) and Port Nicholson Fisheries (lobster). Māori investors also invest alongside others through in private equity funds run by New Zealand companies such as Direct Capital, Pioneer Capital and Oriens Capital.
So what is different about the recently-announced Iwi/Māori Direct Investment Fund, and why is it a significant milestone? Firstly, the sheer number of groups who have given indicative commitments – now more than 35 – is unprecedented for a completely voluntary investment. (For example, Māori investment in Aotearoa Fisheries Limited, the largest Māori-owned fisheries company in New Zealand, had more regulatory aspects.)
Secondly, various types of groups are involved – iwi and iwi corporates, Māori trust boards, pan-tribal organisations, a statutory corporation (Te Tumu Paeroa), and Māori land trusts and incorporations. We have also seen distinct rohe (regional) groupings emerge: Tūwharetoa, Taranaki, Bay of Plenty, Te Tai Tokerau, and Te Tau Ihu. While not every rohe and group in those regions is participating (and not every rohe has investors participating) many groups are aggregating together and presenting themselves as a single investor for the fund.
Another point of difference is the fund’s 15-20 year timeframe. This is longer than the typical 10 year horizon of a New Zealand private equity fund, and fits well both with iwi and Māori groups’ intergenerational focus, and that of trusted partners such as the NZ Super Fund.
The fund intends to work with the NZ Super Fund and other highly regarded institutional investors to ensure it is operating in line with global best practice. It will also look closely at the experiences of other investors – including indigenous investors – locally and overseas. The investment criteria for the fund are currently being finalised among the investors.
Tikanga, Māori values and practices, are anticipated to form a principled backdrop for investment decision-making. Where practical, the investments will reflect tikanga and synergies with existing iwi and Māori assets. There will also be some limits for fund investments – size, exclusions and others. Environmental, social and governance factors will be hard-wired into investment analysis and decision-making for the independent members appointed to the investment committee, with cultural factors providing an overriding context.
Working together with aligned people and groups has always been, and will continue to be, fundamental to future Māori success. Whilst there are various ways in order to work collaboratively, the Iwi/Māori Direct Investment Fund is a new and exciting expression of this mahi tahi in an investment context. By coming together, with well-aligned and compatible partners, Māori investors will have access to, and may be able to stimulate, opportunities that would not have existed otherwise.
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It will be interesting to see whether the current impetus to improve infrastructure and housing, especially in Auckland and nearby provincial cities (Whangarei, Hamilton, Tauranga and Rotorua), intersects with the long term investment horizon that the Iwi/Māori Direct Investment Fund offers. Commercial property and natural resources have also presented as attractive sectors to the investors.
Tama Potaka is direct investments advisor at the The NZ Super Fund. The fund has assisted with the development of the Iwi/Māori Direct Investment Fund, providing input from its investment professionals and access to research data. The NZ Super Fund will not invest in, nor manage, the Iwi/Māori Direct Investment Fund.
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