The Hawke’s Bay Regional Council (HBRC) is close to naming the manager of a new $50 million diversified portfolio put out to tender in July.
It is understood the HBRC selected the provider last week from a short-list of investment consultants and fund managers after a relatively short review process.
Official documents show the HBRC opted to outsource the $50 million portfolio – currently held in cash – following advice from PwC and Bancorp Treasury Services.
The HBRC cash, left over from assets originally designated to help build a controversial Central Hawke’s Bay dam, would be invested in a balanced portfolio, the documents reveal.
According to the HBRC papers, the new portfolio would have a targeted real return of 4.5 per cent in its first year and 5 per cent thereafter. A draft statement of investment policy objectives (SIPO) shows the proposed fund would be split equally between growth and income assets.
All offshore assets would be hedged to the NZ dollar.
“Where practical, investments will be made taking into account the ethical practices of the investment entity,” the SIPO says. “Council’s intention is for the Fund to avoid direct involvement with industries that have a negative impact on society and the environment.”
The HBRC investment blacklist includes companies involved in tobacco, alcohol, military and weapons, and fossil fuels.
However, the fund could shrink by between $6 million to $10 million under a lending agreement with a related HBRC investment company that would initially “reduce the funds available to the Diversified Investment Portfolio to $44 million to enable provision of that loan facility”.
In July the HBRC sold the intellectual property rights to the Ruataniwha Water Storage Scheme (RWSS) for $100,000 after spending $20 million over four years pushing the dam project.
The controversial dam proposal was scuttled last year when the Supreme Court ruled a deal to include Department of Conservation land in the flood-zone was illegal.