The proposed Māori Co-Investment Fund (MIF) would need at least $60 million at launch to be a serious player, according to Tama Potaka, New Zealand Superannuation Fund (NZS) investment hub co-ordinator.
“If it could get $120 million that would be fantastic,” Potaka said.
He said over the next three months the MIF working party – to be funded by the Ministry of Business, Innovation and Employment (MBIE) in a deal announced last week – would seek to translate a renewed enthusiasm for the long-mooted concept into firm commitments from Iwi (tribes) and other Māori entities.
Potaka, the former Tainui Group Holdings head of corporate services who joined NZS this January, said while previous attempts to create a pan-Māori fund had foundered, the current MIF proposal had garnered positive feedback to date.
“We don’t know whether this is going to work,” he said. “But it has never been tried like this before. We’ve had four or five hui in the last few months that were well-attended.
“… Now we have to move from hui and discussion to formal commitments.”
In a release last week, MBIE says the ‘scoping study’ – a joint project of He kai kei aku ringa (the Crown-Māori Economic Partnership), Ngāti Awa Group Holdings Limited (NAGHL) and the NZS – would tap about 30 Māori groups that had previously indicated interest in the MIF.
NZS, which helped kick-off the latest MIF initiative earlier this year, would not contribute capital or help directly manage any fund should it eventuate, Potaka said.
“We’re not assuming this is a goer,” he said. “But we want to part of the team that helps to form the [MIF]. Our motives are clear: we want have a long-term partner to co-invest with.”
While the fund structure and governance arrangements would be determined by MIF participants, Potaka said the targeted investments would likely be NZ-domiciled, mid-tier, private equity “expansion capital”.
“The sorts of investments [for MIF] would probably be in the $100 million to $150 million range,” he said. “We think there is a big gap in NZ in the $100 million to $300 million expansion capital space.”
According to Potaka, investment ideas could flow from the NZS to a MIF and vice-versa.
In a statement last week, NAGHL CEO Geoff Hamilton, said the MIF would give Māori investors access to larger deals than when operating as individual entities.
“We see the fund as an opportunity for mahi tahi (working together), creating a smart effective alliance that gives Māori better options for enhancing investment returns, diversifying our portfolios, and creating significant benefits for our communities and stakeholders,” Hamilton said in the statement.
Collectively, Māori interests manage assets of about $15 billion, the MBIE statement says. However, a large proportion of Maori investments are in physical assets such as land, forestry and fishery businesses.
Nonetheless, a report published by Wellington-based TDB Advisory last December found some Māori entities were becoming more open to externally-managed investment portfolios.
Anecdotal evidence from NZ fund managers suggests a growing number of Iwi mandates have been put to tender over the last year.