Four German investment groups have won approval to invest in 10 dairy farms in Southland and Canterbury with a combined value of $109.7 million.

A total of 3314 hectares of dairy and dairy-conversion land have been approved for sale by the Overseas Investment Office.

The deals have been structured by farm syndication and management group AgInvest through its MyFarm programme.

Taken together, the assets amount to just under half the size and value of the 16 Crafar farms in the North Island, which are under offer from a Shanghai conglomerate.

AgInvest director Cliff King says the deals allow investor syndicates to run typically for five to seven years, after which time the properties are either sold or taken over by the managers and some of the investment groups.

"We buy it, we improve it, we ultimately sell it," King says of the syndicated farms.

AgInvest finds sound farms with potential to ramp up production then matches them with syndicates of investors willing to provide the funds to upgrade the properties.

The latest group of farm syndicates involves a commitment to spend a combined $12.7 million on farm upgrades. Forecast production increases range from 20 per cent to 70 per cent.

In most cases the German groups are taking majority stakes, along with locals, and the farm managers are encouraged to take an equity stake.

Investment by locals ranges from about 5 per cent to almost 50 per cent.

For some of the farm managers the equity investment is an alternative route to share-milking for ultimately buying a farm.

The biggest German investment group to gain OIO approval in the latest round is DAH Beteiligungs, a Mannheim, Germany-based holding company owned by the family of Dietmar Hopp.

It has been cleared by the Overseas Investment Office to buy five farms totalling 1468 hectares valued at $53.2m.

Hopp founded the German software company SAP in 1972, with other former IBM executives. His family interests include sports teams and hotels.

According to Wikipedia, Hopp is the owner of an exclusive French resort, Domaine de Terre Blanche, which he bought from actor Sean Connery.

The applications to buy the kiwi farms are in the name of his son Daniel Hopp, managing director of DAH Beteiligungs.

A second group, listed as Aquila AgrarINVEST, D/S Neuseeland Milchfarm Investitions and Alceda Star, also German owned, won approval to acquire five farms amounting to 1304ha for $37.8m.

31 January 2011

Two further farms, of 544ha in total in Canterbury were cleared for sale for $18m to German and Swiss-German investors. One of the vendors is listed as Synlait Farms Ltd.

In each case the would-be buyers got their proposals over the line with the promise of creating or saving jobs and lifting export receipts with additional investment to ramp up production.

They also made commitments to protecting indigenous flora and fauna, providing public access for walking or fishing and hunting, and selling riverbeds to the Crown, according to the OIO decision summaries.

King says his firm has been putting together farm investment syndicates for 20 years although the latest groups are "very substantial in terms of overseas applications".

The German investors approached AgInvest, which hasn't actively sought foreign buyers, King says.

The last big sale of farmland was with Big Sky Dairy Farms in the Maniototo district in North Otago, which was sold to Harvard University endowment funds last April for $34m.

In response to unease about farmland falling into foreign ownership, Finance Minister Bill English announced in September that ministers would be given more powers to consider economic impact issues when assessing overseas investment applications for so-called sensitive land.