Infrastructure Auckland to return $270 mln to NZ

By NZPA

Monday 19th August 2002

Infrastructure Auckland will invest about $270 million in New Zealand following confusion over its offshore investments.

The regional funding body will liquify its investments in offshore bonds, placing roughly $270 million in government stock and bank deposits.

A further $50 million is already invested in New Zealand.

Infrastructure Auckland will not invest in State Owned Enterprises, or crown health enterprises.

Chairman John Robertson said the Act under which it was created was unclear about where the body could invest. Although an earlier legal opinion indicated it could put its money offshore, Infrastructure Auckland had decided to follow more conservative advice.

"We feel we should go to what the legislation says, if you interpreted it in the narrowest form," Mr Robertson said.

Infrastructure Auckland has asked the select committee reviewing the current legislation to clarify the rules.

Through its offshore investments Infrastructure Auckland had, according to its own calculations, added a 1 percent premium to what it would have earned in bank securities and government bonds.

The body will make a slightly lower return as a result, but was not too concerned about changing its portfolio.

"Transaction costs are always there, but we wouldn't have thought there was any timing issue on the bond market -- we're not invested in the sharemarket at all," Mr Robertson said.

Fellow large regulated investors, the Government Superannuation Fund and the $1 billion ASB Charitable Trust, were not governed by such strict legislation and could invest offshore.

Infrastructure Auckland was set up in 1998 under the Local Government Act to hold money in trust for investment in Auckland.

Mr Robertson said Parliament may clarify the legislation, possibly by the end of the year, as part of its current review of the Local Government Act.

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