NZ Super makes North American renewables investment with infrastructure partner

Investor gains exposure to utility-scale wind and solar via new firm called Longroad

The NZ$30bn (€19bn) New Zealand Superannuation Fund has made a commitment to North American utility-scale wind and solar via an investment in a new outfit called Longroad Energy Holdings that is headed by former FirstWind executives.

FirstWind was a US utility scale renewables firm that was bought by SunEdison and its yieldco TerraForm Power in 2014.

The fund is going into the Longroad investment with listed infrastructure holding company Infratil – the outfit with which it holds its stake in Z Energy – the former Shell distribution arm in the country. The fund has been reducing its stake in Z Energy, saying its original goals have been met.

The fund and Infratil will own the business in partnership with Longroad’s management — and the investment will be managed by investment firm H.R.L. Morrison & Co. Infratil is Morrison’s flagship fund.

“The potential investment targeted for development expenditure is up to USD$100m,” the investors said in a joint statement. Over time, Longroad will provide an option for further investment in “stable, low risk operating assets”.

“We are attracted to the risk adjusted returns that are available in global renewables, and the investment in Longroad, with the capability that the team offers, will help us access this sector and the shifting trend to clean energy in the United States,” said NZ Super’s Chief Investment Officer Matt Whineray.

“The Longroad opportunity emerged from an origination effort focused on North American renewable energy developers,” said Marko Bogoievski, the former NZ Telecom finance chief who is CEO of both Infratil and Morrison & Co.

Morrison is chaired by Rob Morrison, the former Chairman and CEO of Hong Kong-based CLSA Asia Pacific Markets who also chairs Kiwibank. Morrison is a council member of the Asian Corporate Governance Association, a director on the Asian advisory board of The Nature Conservancy.Longroad was chosen after an “extensive review of potential opportunities” and emerged as the “best candidate to realise our ambitions in the market”.

Separately, NZ Super is facing pressure over palm oil investments. The Green Party in New Zealand has challenged it to “explain why it continues to invest and profit from the illegal destruction of rainforest to grow palm oil”.

It said figures provided to the party and the New Zealand Herald showed the NZ Superannuation Fund, ACC Investment Fund, and Government Superannuation Fund have NZ$22m of investments in four palm oil companies linked to the illegal burning and devastation of Indonesian rainforests: Genting Bhd, IJM Corp Berhad, Posco, and Daewoo.

Anne-Maree O’Connor, Head of Responsible Investment at the fund, said: “Palm oil is a high priority responsible investment issue for us and one on which we are currently focused. Earlier this month one of our staff members participated, alongside representatives of 21 other global investors, in a trip to Indonesia organised by the UN Principles for Responsible Investment, WWF Indonesia / WWF International. The visit involved meeting with local palm oil companies and federal and provincial government in Indonesia and local WWF representatives.” Further details about the trip are available here.

Meanwhile the fund’s CEO, Adrian Orr, has spoken in a wide-ranging interview of the importance of ‘kaitiaki’ – the Maori concept of guardianship. “It’s got to be a sustainable, long-term performance,” he told E-Tangata magazine. “And for that to happen you have to care about the environmental, the societal, the governance — the kaitiaki aspects of society. Otherwise, it’s not sustainable. So, we work very hard to identify what’s important to the fund with regard to all of the factors around being a responsible, long-term investor.”

Next on the agenda for the fund will be to play host to this year’s annual meeting of the International Forum of Sovereign Wealth Funds – on the theme ‘Investing in a Climate of Uncertainty’ in Auckland on November 8-11.