Hawke’s Bay Regional Council wants public feedback on the possible formation of an Investment Company.
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Initially raised in the Ten Year Plan 2009-2019, an Investment Company would manage part of Council’s investment portfolio. The possible transfer of Council’s 100% shareholding in the Port of Napier Limited to the Investment Company was also publicised in a Statement of Proposal as part of the 2010/2011 Annual Plan.
The proposed Investment Company as a 100% Council controlled trading organisation would manage investments in companies and joint ventures as well as the 100% shareholding in the Port of Napier Limited. This would not include Napier’s endowment leasehold land, cash and short term deposits. However, as cash is re invested in new assets such as potentially infrastructure investments these would be managed via the investment company.
An Investment Company Board would have up to nine directors, being elected members of Council. This would ensure that control and accountability are seen to remain with Council, as representatives of the regional community, and would also mean no additional fee payments to councillor-directors from the Investment Company.
The Chief Executive of Hawke’s Bay Regional Council would also manage the Investment Company, requiring no additional salary or fees to be paid concerning his role and responsibilities in the Investment Company.
The principal benefits of an Investment Company are that it would:
- Enhance Council’s strategic management of its investments to achieve strategic development objectives for the Hawke’s Bay region;
- Improve Council’s ability to actively manage investments and their potential net financial, economic, environmental and cultural returns;
- Provide operational flexibility and access to tools not otherwise available directly to Council, resulting in increased returns.
- Enable investment for strategic development of the Hawke’s Bay region;
- Make the most of tax paid returns to Council from those assets;
- Improve investment portfolio returns;
- Provide an easier way to work with other public and private sector investors in future development projects;
- Ring-fence specific investment risks;
- Create a channel to realise profits, introduce other shareholders or dispose of under-performing investments;
- Strengthen the commercial focus of Council’s investment decision-making through in-region and national external appointments to the subsidiary and associated companies of the investment company;
- Move Council’s corporate tax-paying entities, i.e. the Port of Napier Limited, to a more efficient tax structure, with improved financial returns.
Council would still control investment decisions and decide whether to add equity to the Investment Company for each new investment proposal.
- An Investment Company will incur additional costs for its establishment and is likely to incur ongoing operating costs over and above the costs of managing the portfolio of the Council’s previous passive investment policy.
- The Investment Company needs to recognise the Council will continue to rely on substantial investment income to fund its operations.
To optimise the financial and strategic returns to Council from its allocated investment portfolio and to assist Council to be “a region with a vibrant community, a prosperous economy, a clean and healthy environment, now and for future generations”.
The type of activities carried out by the proposed Investment Company will be to:
- Own and manage investment assets and liabilities transferred to it by Council from time to time.
- Make new investments and dispose of current investments, in line with the Objectives.
- Invest in and manage a range of financial and physical assets which may include property and infrastructure in Hawke’s Bay and elsewhere in New Zealand, shares and equity investments in public listed and unlisted companies, equity in and loans to joint ventures, bonds, term deposits, mortgages and other fixed interest securities, and other financial instruments – in line with Council’s Investment Policy detailed in the Ten Year Plan.
- Raise funds for investment by selling bonds, mortgages, preference shares and other debt instruments or by reducing its holdings in equity investments, subsidiary or associated companies, but not by selling any of Council’s 100% shareholding in the Investment Company itself.
- Assist its subsidiary and associated companies to increase shareholder value and regional prosperity through growth and investment.
- Apply best practice governance procedures within the Investment Company and its subsidiaries and other investments.
- Enhance the Council’s abilities to manage an active investment policy.
- Provide flexibility of operation and access to financial tools not otherwise available to Council directly.
- Help achieve Council’s regional economic development objectives by investing in assets that will benefit the Hawke’s Bay region. Where Council directs, the Investment Company may accept a lower return or slower route to profitability to balance achieving this objective with that of otherwise acceptable returns.
All investments must be made or disposed of, and all income derived from these investments used, for Regional Council purposes and functions as defined in statute, that is, they must generate financial and economic and, where appropriate, environmental, social and cultural benefits for the Hawke’s Bay region.
This document is a summary of the Statement of Proposal which was adopted by Hawke’s Bay Regional Council on 16 March 2011.
The full Statement of Proposal is available for inspection at the following locations:
Regional Council Offices at:
- 159 Dalton Street, Napier
- 26 Ruataniwha Street, Waipawa
- Freyberg Street, Wairoa
Public libraries at:
- Wairoa
- Napier
- Taradale
- Hastings
- Flaxmere
- Havelock North
- Waipawa
- Waipukurau
Copies of the Statement of Proposal may be requested by email investmentco@hbrc.govt.nz or by phone (06) 835 9214.
Public meetings will be held to give people an opportunity to discuss the proposal in more detail and to air their views.
The meetings are being held at the following places and times:
| Napier/Hastings |
Tuesday 5 April |
Taradale Town Hall, Cnr Lee and Meeanee Roads |
7pm |
Central
Hawke’s Bay |
Monday 18 April |
HBRC Offices, 26 Ruataniwha St, Waipawa |
4pm |
| Wairoa |
Tuesday 19 April |
East End Cafe, 250 Marine Parade, Wairoa |
5pm |
| Napier/Hastings |
Wednesday 20 April |
BNZ Partners, 1st floor, 205 Hastings Street South, Hastings |
12.15pm |
Submissions on the Proposal will be received by the Hawke’s Bay Regional Council up until 5pm on Friday 29 April 2011. Submissions may be sent online to investmentco@hbrc.govt.nz or may be posted to Hawke’s Bay Regional Council, Private Bag 6006, Napier 4142.
Submitters will be advised of the date and time for the hearing of submissions.