Taking Stock 13 November 2025

THE concept of a new NZX-listed company buying key infrastructure with a high level of debt and just 20% equity, offering a dividend return of “the bond rate, plus inflation plus a margin” had an unquestioning welcome by the media.

The KiwiSaver salesman, Sam Stubbs, rightly holds the unofficial title of the country’s most prolific financial market salesman, following the retirement of Doug Somers-Edgar and Carmel Fisher.

He fronted the media with his idea, which might have some merit.

Perhaps trained by his current wife, a former reporter, Stubbs is by some distance the salesman offered the most media attention, helping him to drive his Simplicity fund to around seven per cent of the KiwiSaver market. One must applaud his success with the media.

He has regularly used this media access to champion the use of KiwiSaver money to fund social programmes, like low-cost housing. He has promoted the now sidelined idea of KiwiSaver money being used to buy opaque, private assets, and last week he moved on to the idea of buying Crown and council assets in an entity to be listed on the NZX. I applaud his energy.

Beside him at the presentation was the equally pleasant and media-savvy private sector economist, Shamubeel Eaqub, who now works for Stubbs at Simplicity.

And beside them was the just as likeable, but genuinely credible Rob Everett, a former CEO of the Financial Markets Authority and later the NZ Growth Fund. He now chairs Stubb’s KiwiSaver group. Everett has a genuine background in markets, and is not a salesman.

It is easy to see why their presentation would be unquestioned by the media. I cannot think of any financial market trio more skilled with charming the media, thus being given a clear path to discuss their idea, without comment from real fund managers or analysts.

To be fair, Everett was close to silent. Stubbs dwelled on the line that because of the funding link to KiwiSaver, and the intended exclusion of foreign investors, the proposed infrastructure listed fund would not feel like a sale of the country’s essential assets.

Eaqub, with no investment history, but a pleasant left-wing economist, focussed on the proposed fund’s remarkable ambition to deliver a dividend return of bond rate, plus inflation, plus a margin.

If we take his formula seriously, we would expect a dividend of, say, 3.5% (bond rate), 2.5% (inflation) and 0.75% (margin), meaning a gross dividend of 6.75%, a number that would indeed attract other KiwiSaver money. Add 2% for costs, and the gross return from low-risk assets would be 8.75%, until bond rates and inflation rise.

The talk of a debt/equity ratio of $4 (debt) to $1 (equity) implies bankers would charge marginal rates, and allow such high debt levels, because of the certainty of the income produced by the assets.

Stubbs’ trio referenced a sewage plant in Selwyn (Christchurch) which the fund could theoretically buy, enabling Selwyn to cater for its population growth by selling its current plant, using the funds to build another. I am unsure why such a plant would sell at a yield exceeding 8%, and unsure why traditional buyers would not enter the auction, offering to buy at a lower yield.

I inferred that Stubbs’ idea was to raise the debt and/or some equity from many KiwiSaver funds, which would assess the proposed infrastructure fund as being similar in creditworthiness to government or local authority stock.

The assets bought would then charge the users (councils, the Crown, etc.) a price that allowed the fund to pay its costs (say 2%) and meet its promise of a gross dividend of 6.75%, nett around 4.50%.

If inflation and bond rates rise, as I expect, the asset sale might have to produce a nett 10% yield. There would be many wanting to attend an auction with that sort of yield on offer.

Currently government-guaranteed $100,000 deposits in finance companies, Gold Band perhaps the most credible operator, yield 5.5-6%, meaning an 8% - 10% yield on an essential council asset somewhat stretches my imagination.

It is surely this aspect of Stubbs’ plan that deserves scrutiny.

How could a saver in his index-based KiwiSaver products believe the return for risk ratio was credible? If such an infrastructure fund returned 4%, then surely the investor would want to see the asset appreciate each year. Ask Macquarie about its “success” with Thames Water!

Infrastructure depreciates. It eventually needs replacing. Ownership accepts such an inconvenience. A big part of New Zealand’s current problems has resulted from the failure of governments and local authorities to silo the necessary replacement funds.

Conversely, why would a government or council sell a key asset at a yield that accommodated the formula Eaqub discussed – bond rate, plus inflation, plus a margin?

Governments and councils can arrange long-term debt around 4%.

But the question inexplicably not considered by the complaisant daily media was, what rights do investors have, when they invest in Stubbs’ funds? Do they give him autonomy in deciding what to do with their savings?

Are they expecting his fund to match an index? Are they accepting that he, plus his unpaid voluntary work force, can use client money to meet his social investment agenda? Is this not a misuse of someone’s savings, unless they specifically authorise such a use?

One of his endeavours is to produce low-cost social housing, an objective many welcome.

Now we read of a plan to free up money for councils and governments, so they can redeploy capital in new infrastructure.

Would they sell assets at 8% - 10% yields? Really?

Would not other potential buyers compete with bids at lower yields if the asset was really comparable with government stock, or (absurdly) government-guaranteed finance company deposits?

Sam Stubbs is a trader, a salesman, and is brilliant at developing relationships with the media. 

He may harbour an ambition to be a politician, perhaps for Labour, perhaps in the area of economic development. Is he confused about the licence he has in dealing with savings?

He would undoubtedly be telegenic and gain high ratings, if his end game is a leadership role in politics.

His idea of a new listed company buying critical infrastructure at 8%-10% yields sounds exciting. It needs to be scrutinised and challenged if necessary.

I would be furious if any public asset, like a road, a sewage plant, a school, a hospital or a stadium, was sold at a yield anywhere near 10%, when borrowing rates are 4%.

I hope analysts are given media space to discuss his idea.

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WHEN a minority opposes a proposed project, passions run high.

Santana’s proposed mine in Bendigo, near Cromwell, will not be advanced on the outcome of a popularity poll. Were that the determinant, the mining would already be underway, as the informal evidence displays the vast majority in Central Otago who value the economic benefits. (One radio station poll says 85% favour the project.)

A panel with balance and wisdom will adjudicate the consent for the mine based on science, measuring risk versus return.

Given the growing numbers who support the project, it is understandable that opponents increasingly display angst.

Last week’s Taking Stock displayed disrespect for those who frame their judgement with lies, a sign of anger overcoming evidence.

Faux claims that economic benefits would primarily go to Australia, or that the company has no experienced miners, or that Santana had not engaged with all relevant parties, were deserving of disparagement. Those sort of claims attract headlines, but the real substance of the debate will not be built on such nonsense.

The local opposition seems to have at least two concerns that science will discuss. It will be the issues that determine the fate of the consent application.

One claim is that a massive earthquake, stronger than the rupture of the Southern Alps, may arrive any day.

Another is that the mine might allow arsenic-laden soil and dust to poison waterways.

The earthquakes will need to be addressed as a potential, but utterly unpredictable, event.

Any structure that would store poisons, like a tailings dam, would have to be built to survive a massive quake.

Arsenic is omnipresent in Central Otago, a gold-bearing area, arsenic being present in soil in the area of mineralised rock.

Central Otago private bores must always be monitored for arsenic, as recommended by the council for many years, unrelated to Santana Minerals. Currently the bore owners pay for such inspection.

Santana will need to demonstrate that its mine will not be causing higher arsenic levels to become a health hazard. These real issues are no reason for anger or disrespect.

Some remain interested in whether dust, carrying arsenic, might reach sensitive areas. The Santana consent application must address these issues.

Science will prevail. Evidence will be submitted. Risk will be measured.

Dispassionate Fast-track panellists will review this sort of evidence.

Passion brings colour, and headlines, but if anonymously displayed, or driven just to get attention, is unlikely to impress anyone. How it must frustrate those sincere opponents to see their case sabotaged by others who frame their opposition with lies.

One issue that will also be determined by science is the danger of dust.

Sprinkling systems generally control dust near mines that are regulated. In times of winds and dry conditions, sprinklers busily settle any dust.

Last week Taking Stock discussed dust without mentioning how ash from eruptions, toxic particles from nuclear explosions (Chernobyl) or desert storms in places like the Sahara, can carry the particles for great distances.

One correspondent noted that over centuries fine particles have built hills in New Zealand, many miles away.

Of course, the ash from the eruptions that created Lake Taupo thousands of years ago reached a height in the stratosphere that blocked sunlight out, in China. That ash travelled!

Dust, driven by wind, is another issue. It does not get propelled into the stratosphere.

No doubt Santana’s consent application will seek to demonstrate the improbability of Bendigo’s soils sending dust any great distance or causing any concern.

I repeat my view; read the evidence, ignore the emotion.

If a mine at Bendigo was indeed a threat to Central Otago life, it would quite rightly not be consented.

If any threats can be addressed carefully and methodically, then even if the mitigation is expensive, the appropriate response should be defined.

Santana expects to open a multi-decade project that would typically anchor employment and wealth in the area, and would inevitably draw to the area fund managers, analysts, investors, and, most of all, tourists.

It expects to do this without poisoning anything or anybody. I will learn more when I read the consent application.

People with knowledge of particular issues will read the consent application with great interest, I assume.

Passion may have to be subordinated behind evidence-based information.

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THE future leader of the NZ First party, Shane Jones, does not need my help in getting his views into an open arena, but a recent coverage of a short speech he made deserves discussion, even if his message was sharp.

Jones spoke about the role of koha in applications for new projects subject to Fast-track approval and was most specific about the role of koha within an OceanaGold application to extend its mining area.

In naming organisations that seek koha he emphasised that the law would be changed to exclude from the consenting process any party seeking such rewards.

I recall a consent some years ago that sought the support of a large unlisted company, which had some influence because of its size.

The applicant was told to issue 10% of its shares to the unlisted company, in return for its support. If not, expect a very unhelpful approach to be taken by the scorned party.

The shares were not issued. The result was rugged opposition. Hypocrisy was in play; bribery or blackmail.

In my opinion it is not inappropriate for an interested party to make a credible request for sponsorship. For example, a donation to buy a defibrillator is a credible request for a community service provider.

Money for support is a different proposition.

Jones often wins my admiration for his willingness to discuss in public what others may discuss but only behind closed doors.

The consenting process for applications to begin a project must not be decided or delayed by bribery.

New Zealand is not in South America, Eastern Europe, or Asia (or the USA).

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Kiwibank Tier 2 Note Offer

Kiwibank has announced that it is considering an offer of up to $200 million of Tier 2 Notes, which will carry an investment-grade credit rating.

The notes are highly likely to be repaid on the first reset date, 12 March 2031, ahead of their final maturity on 12 March 2036. Kiwibank and other banks have typically repaid similar notes at the first reset date.

Based on current market conditions, we anticipate an interest rate of around 4.75%. Investors will likely not be charged brokerage on this new issue, as Kiwibank is expected to cover these costs. Both the final rate and brokerage details will be confirmed later this month.

If you would like to be placed on the list for this offer pending further details, please email us with your CSN and an indicative amount.

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Travel

14 November – New Plymouth – David Colman

Chris Lee

Chris Lee & Partners Ltd