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Harvard's farms buyer yet to lodge papers

NZ Newswire logoNZ Newswire 7/06/2017 Paul McBeth

The Overseas Investment Office hasn't yet received an application from the reported buyer of Harvard University's 5500-head dairy farms in the South Island.

US private equity firm KKR & Co was reported by Bloomberg as being close to making a US$70 million purchase of 8500 acres of dairy farmland pending regulatory approval as part of a scaling back of the Ivy League university endowment fund's exposure to natural resources.

The deal's been reported as likely to take months to complete, and OIO approval has been seen as a slow process for foreign buyers.

Harvard bought the Big Sky Dairy Farm properties in 2010 for about $32m out of receivership, after what was Central Otago's biggest dairy farm operator defaulted on payments in 2007 before being placed in liquidation two years later.

The Cambridge, Massachusetts-based university has held about 10 per cent of its US$35.7 billion endowment fund in natural resources, built up by former Fletcher Challenge executive Andy Wiltshire who left Harvard Management Co last year.

Among those investments is New Zealand's central North Island Kaingaroa forest.

Accounts for the dairy farms filed with New Zealand's Companies Office show the operation's total assets were valued at $99.2m as at June 30, 2016, including $73.7m of property, plant and equipment, $6.5m in biological assets, and $10.8m in investments, largely being Fonterra shares.

The holding company, DF1, reported a loss of $4.5m on revenue of $12m in the 12 months ended June 30, 2016.

The prior year, DF1 posted a loss of $15.6m on operating revenue of $5.3m during a sharp downturn in the sector when global dairy prices plunged, squeezing farmgate milk prices for suppliers.

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