Strong Financial Performance

Strong Financial Performance

The 2017-18 Financial Year once again saw Raukawa report a strong financial performance. The asset base of the iwi continues to grow, increasing from $132 million to $146m, capping off another year of solid performance and the sixth year of surplus since Raukawa Iwi Development Ltd was launched in 2012.


This strong performance has been noted by TDB Advisory in their Iwi Investment Report for 2018, which was reported on by the New Zealand Herald in early February. You can read the New Zealand Herald article below.


The $9 billion iwi empire: Māori groups’ assets grow, despite slowdown

By: Liam Dann

NZ Herald Business Editor at Large

The combined wealth of the nation’s 75 iwi groups rose by $1.2 billion in the past year to almost $9b, says a new report on iwi holdings.

The TDB Advisory Iwi Investment Report 2018 focuses on the financial performance of eight of the largest iwi, which among them represent about $5.5b of the total asset base.

All the eight iwi groups delivered positive returns for the year, although as the property sector has slowed, so has total growth.

Across the past six years Ngāi Tahu and Ngāti Whātua Ōrākei stood out with reported average returns of 12 per cent a year and 15 per cent respectively.


But last year they delivered lower – though still solid – returns of 8.4 per cent and 7.9 per cent.

Ngāti Whātuā, in particular, is almost completely invested in property in and around Auckland, so it is seeing investment returns slowing with the market.

The Raukawa iwi delivered the best return on assets in 2018, with close to 10 per cent.

Raukawa is based in south Waikato and its investment mix is dominated by managed funds and forestry.

In 2018, a strong performance from its Kakano forestry investment helped push its return on assets above its six-year average of 8.4 per cent.

The report – authored by Phil Barry and Zachary George-Neich – concludes there has been “a reasonably positive financial performance by the sector as a whole”.


However, over the past six years, only two iwi – Ngāi Tahu and Ngāti Whātua Ōrākei – had recorded an average return on assets above the returns of a benchmark portfolio (8.5 per cent), they said.

Raukawa had generated returns broadly in line with that benchmark portfolio and Ngāpuhi, Ngāti Awa, Ngāti Porou, Tūhoe and Waikato-Tainui had seen returns below the benchmark.

“Generally, the more active iwi have made better returns over the 2013-2018 period,” Barry said. “But a more active approach involves greater risk.”

In the report he notes some considerations which may account for the slower growth than other commercial funds.

Several of the iwi have relatively undiversified investment portfolios with few assets outside their rohe (traditional region).

“They are therefore heavily exposed to a single asset class in a narrowly defined geographic area.

“While there are often strong cultural and historical reasons for such a concentration in their portfolios, it is risky from a financial perspective.”

In other areas iwi are relatively risk-averse.

“A common feature of all the iwi is a low level of debt. Three of the iwi have zero debt and the remaining five iwi have a debt-to-capital ratio that is no higher than 17 per cent.”

The iwi also typically had limited access to new capital and had constraints on their ability to sell certain assets.

On the other hand, the report notes, “many iwi have negotiated first rights of refusal on certain Crown assets as part of their Treaty settlements and face the Māori authority tax rate of 17.5 per cent.

“It should be noted that iwi trusts (as opposed to their commercial arms) have objectives that go beyond maximising financial returns. In order to achieve these wider social and cultural objectives, it is important that the investments held by their commercial arms perform to their maximum potential.”

The report presents returns for each iwi group as a whole and calculates them after deducting the respective trust’s operating expenditure.

The returns for the commercial entities of the iwi would be higher as they would include the distributions to the parent entity (the trust), the report notes.

“However, most iwi do not publish separate financial statements for their commercial arms. The returns may also be understated for some iwi who do not revalue upwards some assets – for example, Ngāi Tahu holds significant amounts of seafood quota but does not include upward revaluations of the quota in its reported returns.”

TDB has worked closely with many of the larger iwi, advising them on their investment strategies, Barry said.

“These iwi are playing a more and more important role in the New Zealand economy, but their successes and strategies are not reported on often enough.”

The iwi

Ngāi Tahu

New Zealand’s wealthiest iwi, South Island-based Ngāi Tahu maintained a steady 8 per cent return on assets in 2018.

It holds a diverse portfolio including private equity investments, property, tourism, farming, forestry and seafood.

Ngāi Tahu’s Capital division had a mixed year, with an operating deficit of $18.6m. While shares in Ryman Healthcare and Go Bus produced strong returns, honey-makers Watson & Son (of which Ngāi Tahu is now the sole owner) had another year of poor performance. The Property division remained strong and is now pursuing new opportunities, including the Karamū subdivision in Christchurch and affordable housing programmes in its Hobsonville developments. The Tourism division also had a strong year with new developments like the Earth & Sky project in Tekapō and the All Blacks Experience at SkyCity.

While it had a $4.6m net operating surplus, the Farming division has yet to optimise its land assets and plans to focus on increasing the operating performance of existing farms. The Seafood division posted its best result ever, a $24m surplus, largely through an increase in the value of its kōura (crayfish) market in China.


The Northland iwi’s final treaty settlement with the Crown is still under negotiation.

Ngāpuhi currently has 73 per cent of its assets in a combination of cash and term deposits, fisheries settlement quota and Moana NZ income shares.

Ngāpuhi’s fisheries assets are recorded at cost and are not subject to revaluations. As a result, fisheries assets have not recorded any increase in value, aside from a minor addition to the value of the quota.

Ngāti Awa

Te Rūnanga o Ngāti Awa, located near Whakatāne in the eastern Bay of Plenty, had its best return on assets in seven years – 7 per cent.

Its financial investments include listed shares, unit trusts and unlisted shares, as well as farming and forestry.

Ngāti Awa has also diversified into tourism, buying White Island Tours, which enjoyed a significant revenue increase from $0.5m to $4m between 2017 and 2018, with 2018 being the first full year of ownership of the venture.

Ngāti Porou

Located in the East Cape region of the North Island, Ngāti Porou sold its carbon credits and saw the value of its biological assets rise in 2018, with additions in bees, livestock and forestry assets. A significant portion of its assets (including its fisheries quota and Moana NZ shares) are held at cost and are not subject to revaluations.

Ngāti Whātua Ōrākei

The Auckland-based iwi has plans for significant increases in residential development, including construction at Bayswater on the North Shore. A joint venture with Fletcher in Massey is also underway.

With 100 per cent of its assets in Auckland property, Ngāti Whātua Ōrākei’s portfolio is relatively undiversified, the report says.

While its investment approach has yielded strong returns in recent years, the strategy exposes the iwi to fluctuations in the property market – as apparent in this year’s performance. Ngāti Whātua Ōrākei is looking at investing in tourism to diversify its portfolio in the near future.


Raukawa, based in the south Waikato area, holds about 30 per cent of its assets in managed funds across six providers, although it has been reducing its holdings in favour of investing in direct asset ownership.

In the forestry sector, Raukawa and five other iwi entities together hold a direct investment in Kākano Investments, a minority share of Kaingaroa Timberlands. Now worth $37m, it provided a dividend of $2.85m in 2018. Raukawa also owns 45 per cent of Ranginui station, a 3300 cow dairy and pastoral operation


Managed funds account for 49 per cent of the central North Island iwi’s assets – made up largely of investments in global shares, term deposits, NZ bonds, global bonds and Australian shares.

The main gains in 2018 came from these managed portfolios. Work in progress at the new “central hub” Te Tii in Ruatāhuna is one of Tūhoe’s key current projects, with a payment of $11m on its construction.


Waikato-Tainui is primarily invested in property, as has been the case over the past 15 years. The group has taken steps to diversify its portfolio with the 2016 sale of a 50 per cent share of its largest property investment, The Base shopping centre. Proceeds from the sale were directed into listed equities and repaying debt. It also has investments in primary industries and a pool of direct equity investments, including shares in Waikato Milking Systems, Go Bus and various Auckland and Hamilton based hotels.

Iwi financial success is a story worth celebrating

Inevitably, there was some scepticism about Crown settlements to iwi when the process began in the 1990s and early 2000s.

Talkback callers and newspaper letter writers weren’t shy of voicing fears that the money would be wasted through financial mismanagement.

Some initial mis-steps by Tainui (buying the Warriors, for example) looked like confirming these biases for a while.

But history has proven the cynics wrong.

None of the eight of the largest iwi groups, including Tainui, has lost money. In the last six years all have done better than they would have by sticking the money in the bank.

The lowest rate of return on assets since 2013 was 4 per cent, the highest was 15 per cent and the average was 7.6 per cent.

The sharemarket and property booms aided those returns, which with a more clinical investment approach could have been even higher.

But iwi have mostly opted for low levels of risk, with little to no leverage and a preference for concentrating their investments in their local tribal area (rohe).

Iwi groups are open to criticism from both sides of course.

Financial purists can argue that they don’t fully maximise returns. But the reinvestment in their local communities – where they can create jobs for their own people – is fundamental to the settlement process.

Social activists can, and have, made the case that given the sizeable value of iwi assets – now in excess of $9 billion – more should now be done to assist with the welfare of their people.

What the TDB report shows is most iwi treading a careful middle path, investing long-term to guarantee their people a solid financial base in the coming decades.

It’s a success story that should be celebrated.