Chris Lee & Partners Ltd

Taking Stock 25 June 2026

Businesses and international investors from many countries watch with a mix of curiosity and dismay, so perhaps it is premature to congratulate Matthew Muir (KC and retired judge).

He and his panelists are still contemplating the conflicting opinions and evidence as the Fast-track panel undertakes its task of hearing Santana Mineral's application to begin a gold mine project of great significance to the economy.

Muir and his panel have been impressive and professional in politely enduring a mix of useful discussion and, in my opinion, strident, hysterical nonsense.

The panel is tasked by law to weigh evidence-based information against economic benefit, the hardest calls being how much value you place on matters like the importance of lizards, and how much credence you place on the likelihood of apocalyptic events such as a Noah's-like flood.

Much of the debate will be on the skills of Santana to use adaptive management wisely. Its people have excellent track records.

Some of the decision-making will depend on the rights claimed by various parties who want the status quo — no new activity disturbing their area.

If Muir's panel was simply responding to a popularity poll, the project would be consented today. As a recent Curio poll displayed, nationally the project is favoured by more than two to one, and locally the figure is said to be nearer nine to one.

But the decision is NOT based on a public vote, nor should it be, given that less than 1% of the public have ever worked on a mining project, let alone performed the studies and gained the experience to know how to build a mine, operate it, and adapt to unexpected events, let alone apocalyptic events.

As I will discuss later in this newsletter, much of the "evidence" produced has come from people without a clue as to safe, successful mining, many of those self-acclaimed "experts" being university academics, whose applauding audience would likely be their equally ignorant colleagues or long-suffering families.

To the credit of the panel, they have waded through thousands of pages of opinion and theory, listened to dozens of pompous opinions, and politely allowed "experts" to repeat untruths as though a lie, if repeated often enough (as in Animal Farm), becomes conventional wisdom, indeed the "truth".

I tip my hat to the panel's professionalism. As a disclosed investor, I concede my tolerance of nonsense is low, but if the panel concluded the project did not have a nett benefit for New Zealand, I would still applaud the panel's behaviour and respect its professionalism.

Right now the panel has stopped its public hearings, the last of these in Wellington, over a period of a fortnight.

My lasting memory of the Wellington proceedings are of three insightful responses by the panel Chair, revealing both his calm and respectful attention during presentations, and his sense of irony.

He wondered why the Historic Place’s spokeswoman was so emotionally attached to the “archeologically important” remnants of an 1860s gold mining site, yet not so respectful to modern gold mining.

He asked Iwi if it felt that Iwi had a right of veto to the project. (Iwi, wisely, replied “No”).

He wondered why there was certainty that post-mining the site could not be remediated, given he had visited in California much larger sites which, post-mining, have become wonderful, tourist-attracting nature reserves.

Given the minutes of nearly 200 meetings between Santana and Iwi, he might have read enough to wonder at what point the consideration of “compensation” became irrelevant to the Iwi opposition.

He was a polite, intelligent, and highly experienced judge, and now brings those qualities to the Fast-track panel.

The panel now has several weeks in private to differentiate important science from silly prattle and, if necessary, to call back witnesses to clarify issues and in two months will put back to Santana the opportunity to adjust its application to allay any worries the panel believe to be relevant to the consenting decision. Muir acknowledges the time frame is inflexible.

As an example of a potential adjustment to the application, Santana could respond to one "expert" who spent some time seeking to influence the panel into believing that Santana might manipulate its financial affairs to avoid the remediating of the land, as Santana has promised. Part of that commitment would be a $50 million fund to underwrite the promise. 

Perhaps Santana might be invited to place that sum now into some sort of trust fund, so that the money cannot be otherwise used, defusing those who believe Santana is not trustworthy.

In essence, the months of adversarial testimonies are now over. 

Ultimately, the decision will be declared on or before October 29. My expectation is that the panel will consent the project after imposing some relevant conditions.

This process would have been absurdly expensive — tens of millions — and is one very few countries in the world would have endured.

In most countries, the project would already be producing gold.

Yet I believe it has been a worthwhile process, for reasons unintended. It has produced a value by uncovering a number of highly unsatisfactory NZ practices, not addressed by current law.

NZ needs new precise law to prevent opprobrium felt by its global partners over the obstacles NZ is placing over our economic recovery.

Those issues may extend beyond what I list below but they certainly include my list.

What right beyond a case against the Crown does Iwi have to stall a project on private land?

What right does Iwi have to seek money from private companies operating on private land?

What is the logic of allowing irrelevant parties like the Tarras activists to seek to intervene?

The current law offers involvement to those on abutting properties, not those 18 kilometres away.

What defines "expert" knowledge? University academics display poor research and repeat utter nonsense? ("All the money goes to Australians")

Can spiritual beliefs be regarded as scientific evidence, and be used to form an objection to a project?

What sanctions can be applied to appalling mainstream media outlets who allow the ideology of juvenile reporters to convert to a media campaign? Should such media be denied access to hearings?

Should the process demand substantial bonds from parties who appeal the panel's finding? A vexatious or frivolous or stupid appeal costs time and money. Natural justice is usually served by the court awarding costs against such appellants. Should the Fast-track Act define a bond (say at $500,000) to be available to the injured party if the appeal is found to be simply irksome?

Might the vexatious party then walk away, claiming it had no ability to pay?

All of these issues justify detailed discussion, and then lead to new laws.

The issues around Iwi are difficult.

My own view is that it is respectful and logical for a party such as Santana to communicate carefully and warmly with Iwi.

The Iwi decision-making structure is complex.

We have Iwi which can often be small groups of local hapu, dozens or sometimes hundreds, often sharing a marae, each adult a potential voter. Unanimity is absent.

We have runanga, which often represent several hapu but may allow hapu members to vote.

We have a tribal organisation like Ngai Tahu, of often highly skilled people with access to very significant funds, skilled legal advice, and with easy access to politicians. Ngai Tahu itself has an advisory board.

In Santana's case it is simply respectful and business-like to confer with all groups. Where is a binding agreement made?

Iwi will typically make up the majority of the mine's workforce. The jobs are highly paid and enjoyed by those in the workforce.

Scholarships and pathways to management are logical. So, too, is the use of Iwi expertise, in matters like the regular testing of water qualities, and the optimal way of respecting the local flora.

Grants to Iwi can be seen as credible sponsorship.

But runanga or hapu claims of tens or hundreds of millions as some sort of "compensation" equate to extortion or corruption, in my language.

Stock exchange law prevents companies from indulging in corruption.

The Fast-track legislation ought to define corruption and extortion, and ban offenders from the hearing process. Which parties must be invited to make submissions needs careful thought, and ultimately tight law.

We already have elected regional and local councils to represent ratepayers. They will surely learn to exclude activists from the people they ever hire as "consultants".

The lobbying of these councils ought to provide sufficient opportunities for the myriad of often uninformed or irrelevant groups (such as the self-appointed Tarras group), leaving it to councils to represent the pro, and anti, local groups.

Admittedly councils have great difficulty in competing with law firms, accounting firms and special consultancy companies to acquire staff with special skills.

But if councils are to receive grants from GST or royalties, they should have the funds to be the relevant voice of a democratic and rational lobby.

We already have the ideologically-intransigent Department of Conservation. Let them have a voice.

If the project touches Maori land, Iwi would have a loud voice and should be heard.

A much smaller number of eligible voices might help the country move away from the child-like belief that university academics are essential, let alone useful, contributors to such a process.

The country's mindless acceptance of ideological and often intellectually dishonest presentations of those whose careers are aeons away from the real economy is a mindset that is discredited.

It is hard to forget the documented cases in the Insider documentary that followed the 2008 Global Financial Crisis. This presentation outed university professors claiming absurd personal money for such nonsense as one Columbian university professor, who agreed to write a one-page baseless, untrue letter praising Icelandic banks as evidence to support a dishonest financial offering. He was paid US $120,000 for his real-world ignorance.

Such offerings led global investors to billions of dollars of losses, including here, where a Dunedin-based fund was engaging with Icelandic banks.

Nor can one forget one Wellington university, where one of its staff published in the local paper with faux horror the inequity of one Wellington suburb having better houses and cars than was the case in another suburb. (Are we ready for communism?)

As education changes, this type of problem of one-sided ideology and false claims of expertise may sort itself out, but the Santana project provides convincing evidence that Fast-track processes gain nothing by listening to people without real expertise or experience, but with political objectives.

In Santana's case there were repeated "expert" comments on the "10,000-year lakes of poison", the nett proceeds being paid to Australians (the ratio is around 70% NZ, 30% Australia) and the pouring of "cyanide" into “dams”.

All of this evidence revealed profound ignorance and a blatant absence of research and knowledge. Or else the claims were deliberate lies.

Do we need to define the credentials and experience of "experts" qualified to offer useful evidence? Very few university academics would qualify as being relevant, if my observation is the guideline.

The definition of the relevance of spiritual beliefs is, I accept, difficult.

Like most people, I avoid judging the various spiritual convictions of others.

It would be frivolous to discuss those very small number of Iwi who genuinely believe their ancestors' spirits are offended by modern disturbances and somehow must be appeased.

Not even the Waitangi Tribunal would succeed in finding a mutually acceptable pathway to accommodate the tiny numbers who argue what others see as mythology. Perhaps the solution would rest in what is evidence-based.

Any claim I made about my ancestors' spirits being offended would fail for lack of evidence.

The issue of the mainstream media is serious and must be addressed.

The Otago Daily Times, whose readership is built in the area where the mine is planned, has been badly served by what appears to me to be a weak, incompetent editor, who has allowed an ex-Brit reporter of no visible merit to colour all her coverage of the Santana story with her own Green Party dogma. 

What is the editor thinking? Readers have received very little balance to the reporting.

In some cases, angry responses to her often childish reports have been hidden behind a paywall, despite her articles being available in public. Is this practice not deceptive?

The public response of outrage has not led to better behaviour. It has cost the paper money. Good. It deserves the penalty.

The Otago Daily Times has lost around 5% (5,000 people) from its circulation while other papers have increased their circulation.

I am told that many ODT reporting staff have been nauseated by the display of editorial bias, probably personally absorbing the abuse and frustration of readers.

But the relevant issue is that the public has been mis-informed and given very little balanced information on an important subject. Expect the Media Council to intervene, soon.

The Post and Sunday Star Times in Wellington have committed similar errors allowing a reporter from Luggate (near Cromwell) to colour his reports with what seems like his beliefs, that are irrelevant to his readers.

Mercifully The Post has appointed a new editor, Matthew Hooton, who is highly unlikely to allow his reporters to present their opinions as having any value to readers.

Perhaps the Fast-track Panel law should give the various chairpeople a clear right to debar those organisations who abuse the hearings by colouring coverage with ideology.

All of the issues I raise should be included in the review of the Fast-track legislation which the Minister of Resources has promised, if the current coalition government is re-elected.

For example he is outraged by the hapu claim at Tauranga for around $435 million, to offset their cultural "losses" when the Port of Tauranga develops its port.

The Minister, Shane Jones, has said he would eliminate such parties from the consultation process.

So he should!

If NZ is to continue to have such lengthy expensive Fast-track processes, it should make incremental improvements to remove self-important but inexpert activists and "experts". This would reduce repetition, and reduce cost.

Most of all we need the process to restore New Zealand as a credible country in which business is conducted transparently, respectfully and fairly, without delay, stepping well away from what is often, perhaps too often, written off as "wokeness".

Matthew Muir and his panel have endured an ordeal to try to deliver an optimal decision. These people deserve our respect for their sufferance, and hopefully for their wisdom. They need better law to help them.

_ _ _ _ _ _ _ _ _ _

Paraparaumu Seminar

The first of our seminars this year will be held at Southward Car Museum, Paraparaumu, on 7 July. Please contact us via email if you would like to attend.

_ _ _ _ _ _ _ _ _ _

New Financial Adviser Position

We are currently looking to add an experienced Financial Adviser to the Chris Lee & Partners team.

This is a long-term role based in Paraparaumu, working closely with our long-standing clients throughout New Zealand.

If you are interested in learning more, please contact us confidentially at office@chrislee.co.nz.

_ _ _ _ _ _ _ _ _ _

Travel

26 June - Napier - Edward Lee

Chris Lee

Chris Lee & Partners Limited

Taking Stock: The Point Where Logic Left the Room

James Lee Writes:

"A long-term fair return is better than a short-term maximum return, James."

I have never forgotten that conversation.

We were discussing two very different approaches to organising societies. On one side sat what I would broadly describe as the Nordic and Singaporean model - different countries, cultures, political systems, but built around a similar idea. Economic growth, capital creation, innovation all matter, but fairness matters too. The objective is not to maximise every outcome, it is to create a system that delivers prosperity while maintaining social cohesion and long-term stability.

On the other side sits the increasingly dominant American model.

To be clear, there is a lot to admire about America. It remains the greatest economic engine humanity has ever created, producing extraordinary companies, entrepreneurs and innovation. But increasingly the philosophy feels different. The objective is not balance - it is maximisation. Maximise shareholder returns, quarterly earnings, valuations, GDP, engagement, productivity. Maximise everything.

There is nothing inherently wrong with optimisation. In moderation it drives progress. The problem is that what begins as optimisation often ends as obsession. Systems designed solely to maximise outcomes eventually become fragile because they stop recognising trade-offs, stop recognising limits and, most importantly, stop recognising common sense.

In a capital market sense this concept of balance is the legal idea that you act in the interests of ALL stakeholders, not just to maximise short-term returns.

Globally there are different nuances. In the US, Delaware law suggests the duty is to the corporation and its stock holders. At the other end of the spectrum, Germany has co-determination laws giving employees board representation and they emphasise the enterprise as a social institution.

I have always believed in balance. Not because it produces the highest return in any given year (it does not) but balance is durable. A long-term fair return is often more valuable than a short-term maximum return precisely because it allows systems, businesses and societies to endure. For companies this means they trade at a higher multiple.

Japan is the clearest living indicator of where the maximisation road ends. It has an ageing population and will be approaching peak fiscal burden around 2040. Social security already consumes 56% of government expenditure, there are only 1.7 working-age people supporting each retiree, rural areas are emptying and 34% of the population live alone. The demographic relief from mortality only arrives meaningfully around 2050 - by which point the debt overhang may be the dominant problem regardless. It is not a cautionary tale about the future. It is a cautionary tale about the present, playing out in slow motion.

When future generations look back at parts of this period, I genuinely think there will be moments where they stop and ask themselves what on earth we were doing; not because the world was terrible, but because we normalised things that were obviously irrational.

We lived through a period where three major conflicts erupted simultaneously, governments borrowed extraordinary sums not to build productive assets but simply to fund spending they could not afford, and political systems increasingly rewarded popularity over competence. We reached a point where investors convinced themselves that passive ownership of an index was a substitute for independent thought, while companies celebrated firing thousands of employees to fund speculative capital expenditure.

Perhaps the greatest irony is that accounting standards continue to treat investment in people as a cost, while investment in unproven projects is an asset. The engineer, scientist, teacher, nurse or manager who creates real value is an expense; the speculative project consuming billions with no certainty of return is an investment.

It is worth pausing on that. The people who build real things, train the next generation, keep patients alive - they are a line item to be reduced. The moonshot with no revenue model is the asset to be celebrated.

Explained to someone fifty years ago, that logic would have seemed like madness.

And perhaps that is the point.

Maximisation

Whether you maximise margins at the expense of your customers, or you maximise how much you pay your staff at the expense of shareholders - eventually creates fragility.

We have seen it in politics, in energy markets, and today I want to talk about maximisation in financial markets and why this feels like the warning bells of change, not signs of success. Like most warning bells, I look at why we should be listening to what they are trying to tell us, not celebrating their music.

Let's start with passive investing. The original idea was brilliant - most active managers underperform, fees matter, and broad diversification works. Giving ordinary investors access to markets at low cost has been one of the great financial innovations of the past 50 years. But every successful idea eventually gets taken too far.

Today, an increasing share of capital flows not because something is attractive, profitable or sensibly valued, but because it is already large. At some point the distinction between investing and following got blurred.

Last week SpaceX listed at an extraordinary US$2.3 trillion, well over 100 times historic revenue.

Both OpenAI and Anthropic have announced their intention to list, which means this cohort will collectively bring approximately $5 trillion of new market capitalisation to public markets. These three companies, which are the largest direct and indirect customers of Nvidia, are together worth more than Nvidia itself (currently valued at around $5 trillion).

But here is where the logic test arrives. That $5 trillion cohort will likely generate combined annualised revenue of only $75 to $100 billion in the coming year, while sustaining tens of billions of dollars in losses.

Nvidia, by contrast, is expected to generate over $380 billion in revenue this year and earn over $200 billion in EBITDA. Both bets rest on the same question, can AI find a commercial model that justifies the investment? However the market is pricing the loss-making challengers at 50 to 70 times forward revenue while pricing the profitable infrastructure provider at roughly 13 times.

Nvidia earned $58 billion in net income in a single quarter, more than most countries produce in economic output in a year, yet the stock fell on the day because investors wanted more. That is what maximisation obsession looks like at its peak.

What concerns me more specifically is that some of the largest institutions in the world appear increasingly willing to bend established rules because certain companies are simply too BIG to wait for.

Investor protections, governance rules and free-float requirements exist for a reason. Yet we have seen most indexes decide to accelerate these companies into major indices because demand is overwhelming.

Thankfully S&P made a decision to apply caution, so investors get to decide whether they want to fund the losses required to see if AI can be commercially successful in the largest index.  Why this matters is that by indices allowing fast-tracked loss-making companies into their index, they are forcing the retirement funds of the average person to be used to fund those massive losses.  By the end of 2026, assuming Anthropic and Open AI list, they will have collectively raised over US$500B, and collectively will still be losing tens of billions a year. My view is that even the most seasoned investor can't make a sensible call on whether that makes sense. The idea that the average person can, is pure lunacy.

We are watching one of the largest concentrations of investment risk in modern financial history develop in plain sight, not because investors are consciously choosing it, but because the system is choosing it for them. The retirement savings of millions of people would become increasingly concentrated around a single idea (artificial intelligence) and not because they chose it, but because an index decided to skip their own rules to include them. If this bet does not work and the cost of AI is more than the benefit, then this $10T of market cap will fall 70% or more.

Think about how extraordinary that is. For decades, passive investors were told that both low-fee diversification and rules-based investing was a better way to invest. Yet we appear to be moving toward a world where retirement savings are funding, and becoming concentrated around, a single technological narrative and a handful of companies, because the gate keepers of the index we track changed their rules.

Perhaps artificial intelligence changes the world as many believe it will; the technology is extraordinary. But that is not really the point. The point is that nobody seems particularly interested in discussing what happens if expectations prove too optimistic. To give context to this bet, assuming Anthropic and Open AI list like Space X, 71% of the Nasdaq 100 would be in 14 companies and 11 of those 14 companies would be either fully reliant or partially reliant on the success of finding a commercial model that works for AI tools.

This bet should have been funded by experts that know that these types of companies don't always work. When listed they should be owned by people who choose to take that risk. What they should not have happen, is for traders to buy it because they believe they will be able to sell it to passive index funds (the bigger fool theory).

History is full of transformational technologies that changed the world while simultaneously disappointing investors. Railways changed the world. Telecommunications changed the world. The internet changed the world. In each case the technology succeeded, and in each case investors eventually discovered that technological success and investment success are not always the same thing.

Now if this frenzy towards AI was limited to $75B of investment int Space X, I think I would just shake my head and move on, but the same behaviour is becoming visible across corporate America.

Every earnings call, every board presentation, every strategy day sounds remarkably similar - larger AI budgets, more computing capacity, bigger investments and increasingly ambitious projects. There is a growing sense that nobody wants to be seen spending too little, even when nobody can confidently explain what the appropriate amount of spending actually is.

Recently, Uber acknowledged that it had effectively consumed its entire annual AI budget within four months and was still evaluating whether the returns justified the expenditure. One of the most sophisticated technology companies in the world was saying, in effect, that the money had been spent first and the return was still being worked out afterwards.

Ten years ago that kind of admission would have triggered alarm bells. Today it barely makes headlines.

Microsoft has reportedly begun reassessing parts of its AI deployment where adoption has not met expectations. Meanwhile, phrases such as “token maxing” are entering corporate vocabulary, as employees compete not to create more value or deliver better outcomes, but to consume more AI resources. A decade ago, that incentive structure would have been laughed out of the room.

That should concern investors, because history teaches us that the largest investment mistakes are rarely caused by people backing bad ideas. They are caused by people becoming too concentrated on good stories.

And AI is currently the greatest story ever told. Even the CEO of Open AI said customers have yet to find a commercial return for their investment because it's too new, but not to worry just wait a year. 

Which brings me to Bitcoin and Strategy.

Firstly, why does Bitcoin matter?

To me, an asset is worth whatever the largest pool of capital says it is worth at any given time. Simplistically, value investors look for earnings, growth investors look for sensible growth, and story investors look for narrative. Story investors often pay the most, but usually for the shortest period of time. Eventually, either the growth catches up with the story, or the asset needs to find the next group of story investors. Think Pacific Edge: more than 15 years of a compelling story and substantial volatility.

As companies or assets shift from one investor group to another, valuations can move materially. But when the story breaks, it can break quickly. For that reason, any sign that Bitcoin’s story is breaking would be an important bell to listen for.

Therefore, I do not view Bitcoin simply as an asset class. I view it as a useful gauge of how much risk tolerance the market has chosen to adopt.

What concerns me is leverage masquerading as certainty. At the start of the year, we said one of the cracks in the system to watch was Michael Saylor and Strategy, the world’s largest corporate Bitcoin buyer. The original Strategy thesis was simple: borrow money and buy Bitcoin. If Bitcoin compounds materially faster than the cost of capital, everybody wins. The framework was effectively built around the belief that Bitcoin would continue appreciating at rates that comfortably exceeded borrowing costs. The strategy works brilliantly when Bitcoin rises, and considerably less well when it does not.

Today we have Bitcoin, Strategy and now Stretch, a credit instrument paying 11.5% and soon to distribute semi-monthly, used to fund further Bitcoin purchases. These are three increasingly complex structures, all sitting on top of the same underlying belief.

What catches my attention is not the structure itself, but the messaging. I have learnt over time that when leaders begin changing the story rapidly, it is often because reality is changing underneath them. Bitcoin was digital currency, then digital gold, then digital energy, and now, apparently, the objective is for Stretch to become one of the best credit instruments in the world.

At some point, you stop listening to the explanation and start asking why the explanation keeps changing. The messaging increasingly feels reactive rather than strategic. Pressure has a way of revealing itself.

Today Michael Saylor has lost over US$10B following his strategy of borrowing money to buy Bitcoin. His credit instrument is trading underwater, his shares are down 20% this year and Bitcoin is down 25%. The narrative is changing rapidly, and the logic still doesn't add up.

Borrowing money to buy an asset in the hope it goes up is gambling, not investing.

This is a clear reminder that not every bet is straightforward. In fact over 50% of investors in Bitcoin are underwater.

The point is not that Bitcoin must fail, that AI must disappoint or that SpaceX is not remarkable. The point is that when narratives become powerful enough, people stop asking basic questions such as what is this worth, what can go wrong, does the structure make sense, is this risk consciously chosen or simply inherited through the system? That is usually when risk is highest. With the Bitcoin story starting to turn, I see that as the first bell to ring.

So while we are seeing bells ring with corporates saying they aren't seeing the benefits yet, our savings are being poured at record pace into this bet, and the risk appetite of the average retail investor is beginning to wane.

A solution

Now if we had competent leaders around the world we would see regulation and targeted investment start to emerge to control the risks of bad events. Unfortunately the same dynamic is playing out politically.

The past decade rewarded attention, outrage, division and performance over competence.

Compare the world today with 2016 and technology is better, artificial intelligence is extraordinary, computing power has exploded, yet many people feel less secure, less optimistic and less trusting of institutions than they did a decade ago.

That should concern all of us, because the purpose of progress is not simply to become wealthier. It is to build a better society.

Listening to the recent budget debate comments from Christopher and Chris reminded me of listening to my children argue in the back seat of the car (endless point scoring, endless interruptions, very little value).

New Zealand faces serious structural challenges. Productivity remains weak, infrastructure is under pressure, healthcare is struggling, housing remains unaffordable for many families and our energy system still lacks the resilience we will likely need over the next decade. These are not small problems. They require seriousness, discipline and a willingness to build things that may not produce immediate political rewards.

The challenge for New Zealand is not whether artificial intelligence succeeds, whether Bitcoin survives or whether SpaceX changes the world. The challenge is whether we remain capable of independent thought while everyone else is being swept along by the crowd.

New Zealand needs to remember it is competing globally with players who are better funded, more willing to bend the rules, and who do not care what happens to NZ, so we need to fight like a welterweight - faster, smarter and more nimbly.

The key strength a government has is simple. It doesn't need a market return for its investment. It should value what we started this discussion, with benefits to ALL stakeholders. So as we watch the warning bells ring, we need to focus on solving our own problems, and tackling things we often say are too hard.

As I often observe: Complaining without a solution is whining.

Fixing our energy supply in order to lower pricing isn't complex. Sell the government’s stake in Mercury and Meridian, nationalise Genesis and then use those surplus funds as the equity check for Genesis to "build, baby, build" using the government’s cost of capital. Start with wind and solar energy, then build a pipeline to build hydro reserves and finally when Rio Tinto next wants to leave New Zealand, buy them a plane ticket.

Fixing our banking system isn't complex. Levy every bank with more than $50B of assets an extra 50bps every year until it balances out and use that to fund Kiwibank to compete. Margin down across EVERY single asset class, not just home loans. Build expertise at Kiwibank in all financial products, stop trying to be the safest bank. Get back into KiwiSaver, wealth, Insurance, all forms of lending. Just hire the very best to do it.

I can hear the outcry now that it wouldn’t be fair to take money from corporates to fund social problems. But as the father of a friend of mine used to tell her, show me where it says life is supposed to be fair.

For investors, this is where it gets interesting.

Most portfolios are becoming increasingly concentrated in a very small number of ideas, with more and more retirement savings directed toward AI, whether directly or indirectly through passive flows, on the assumption that today's winners will remain tomorrow's winners. Maybe some will. But history suggests that periods of extreme concentration rarely end the way people hope.

What concerns me is not artificial intelligence itself, as the technology is extraordinary, but the behaviour surrounding it. When companies celebrate spending rather than outcomes, when employees compete to consume the most resources rather than create the most value, when investors stop asking what something is worth and instead ask how much more money can be directed toward it, I start paying attention.

The last decade rewarded maximisation (leverage, engagement, debt, valuations, outrage).

My suspicion is that the next decade rewards something different, balance. Not because balance is exciting, not because it produces the highest return every year, not because it makes the best headline but because balance survives.

In practical terms, that means looking carefully at businesses with real earnings, genuine pricing power, lower leverage and less existential dependence on a single technological narrative proving out.

It means asking not just what you own but why, and whether the concentration of risk in your portfolio was consciously chosen or quietly inherited through an index that changed its own rules.

It means valuing the companies that treat their people as assets and their customers as partners, not as variables to be optimised. It means being willing to accept a fair long-term return rather than chasing a maximum short-term one.

The world feels tired. Tired of the politics, the financial engineering, the outrage and the relentless pressure to optimise every decision for the absolute maximum outcome. The pendulum is swinging, and when I look around today I increasingly think people have had enough of the madness.

Now is not the time to passively follow crowds. It is the time to think carefully about what you own, why you own it, and whether the risks you are carrying are risks you consciously chose, or risks the system quietly chose for you.

Because when the crowd becomes obsessed with maximising everything, the opportunity often lies in remembering that balance matters. And history suggests that is usually the moment when logic finally starts finding its way back into the room.

Oceania Bond Offer

Oceania Healthcare has announced it is considering an issue of 6-year fixed-rate, senior, secured bonds.

No details have been announced regarding a margin or minimum interest rate. Based on similar bonds and current market pricing, we expect the bond to pay a coupon of around 5.50%. It is worth noting that swap rates have been particularly volatile of late.

Oceania is expected to pay the transaction costs, meaning clients would not pay brokerage. This will be confirmed next week, when the offer is expected to open.

Oceania produced its full year result in May, which saw record sales volume, a meaningful increase in its net assets, and a significant reduction to its net debt. Its debt now sits at 30.1%, the bottom end of its target 30% - 35% range. Although the company is not paying dividends, it is targeting 2027 for a return to dividend payments.

Investors interested in such an offer should contact us as soon as possible with their CSN and the amount they wish to invest.

Paraparaumu Seminar

The first of our seminars this year will be held at Southwards, Paraparaumu at 10.30am on July 7. Please contact us via email if you would like to attend.

New Financial Advisor Position

We are currently looking to add an experienced Financial Adviser to the Chris Lee & Partners team.

This is a long-term role based in Paraparaumu, working closely with our long-standing clients throughout New Zealand.

If you are interested in learning more, please contact us confidentially at office@chrislee.co.nz

Travel

24 June – Lower Hutt – David Colman

26 June – Napier – Edward Lee

Chris Lee & Partners Limited

Taking Stock - 11 June 2026

Edward Lee writes:

CRITICAL minerals and strategic resources are fast becoming one of New Zealand’s biggest opportunities.

New Zealand has spent many years talking about productivity, exports, regional development and building a stronger economy. Governments, business leaders and economists return to these themes often, but far less attention is given to the practical question of where future growth will actually come from.

For a country of five million people, economic growth is ultimately built on producing goods and services that the rest of the world is willing to pay for.

Historically, New Zealand has achieved this through agriculture, tourism, retail, forestry, technology and services, and now, another sector is attracting renewed global attention - mining and strategic resources.

Around 70% of New Zealand's economy is made up of service industries. Productive sectors such as agriculture, forestry, fishing, manufacturing and resource extraction account for a much smaller share of GDP, despite generating a significant proportion of the country's export earnings.

Recently, I spent time with management from both Tāiko Critical Minerals and Rua Gold. I have also continued to follow developments at Santana Minerals, which many of our clients have invested alongside us over recent years.

These companies all operate in different commodity markets and have different development pathways, but together they highlight something increasingly clear in that the world is changing rapidly, and secure access to raw materials is becoming strategically important again.

For decades, globalisation encouraged countries to rely on international supply chains, with an assumption that raw materials, components and finished products would always be available when needed.

That assumption is now being challenged by trade tensions, war, export controls, energy security concerns and deteriorating relationships between major powers. The result is that minerals, mining and resource security have returned to the centre of economic discussions.

Critical minerals feed modern economies through energy systems, electronics, industrial manufacturing, infrastructure, telecommunications, transport networks and defence capability. Everything from electric vehicles and batteries through to smartphones, semiconductors, solar panels, data centres and military equipment require materials that must come from somewhere.

Remember, everything around us has either been mined or grown, making resource extraction one of the most essential parts of every modern economy. Whether it is timber, coal, iron ore, gold or rare earth minerals, modern societies depend on raw materials.

New Zealand cannot afford to be left behind. If critical minerals become harder to source while demand continues to rise, basic economics suggests prices will increase and countries with secure supply will be in a stronger position.

The idea that New Zealand should avoid developing its own resources, rely on other countries to do the mining, pay whatever prices global markets demand, and forgo the jobs, taxes and royalties that responsible mining can create, simply leaves the country further behind.

China recognised the strategic importance of critical minerals earlier than most countries. Over many years it built influence across mining, refining, financing and processing, with processing and separation capacity often becoming the more important part of the supply chain.

In several commodity markets, Chinese producers have also been prepared to increase supply aggressively when competing projects outside China were attempting to establish themselves. This placed pressure on prices, made financing more difficult and reinforced China’s dominance across many mineral supply chains.

Investors who have followed lithium, rare earths, antimony or other specialty mineral markets will recognise this pattern.

Projects outside China can spend years drilling, consenting, modelling economics and raising capital, only to face sharp price falls just as they approach development.

Governments increasingly describe critical minerals as strategically important, but projects do not get built from supportive speeches. If governments genuinely want diversified supply chains, there is a reasonable argument that strategically important projects may require greater government support.

That may mean subsidies or direct ownership, or it may involve debt facilities, purchasing commitments, faster consenting, strategic investment, offtake agreements or mechanisms that reduce exposure to market distortions.

The New Zealand government attempted to modernise our outdated consenting system by introducing legislation to help speed up the process, however the Fast-Track process may need to be renamed, as it certainly isn’t fast.

There has been some discussion that “consented projects which go through this new legislation will get reversed”. However, in practice, this would be highly unlikely.

Labour, National, ACT and New Zealand First, representing the overwhelming majority of Parliament, have all indicated that companies already within the Fast-Track process, provided applications have been lodged before the election, would continue progressing through that process.

This has created a rush by companies to get applications lodged before the election.

If an election resulted in a change of government, new applications would likely be halted while any incoming government negotiated potential changes to Fast-Track legislation but companies already within the process are likely to be in a materially stronger position than those still preparing applications.

This broader backdrop helps explain why companies such as Tāiko Critical Minerals are beginning to attract attention.

Tāiko’s Barrytown project sits on the West Coast and focuses on mineral sands containing products including ilmenite, garnet, zircon and rare earth-bearing minerals.

Tāiko has now lodged its substantive Fast-Track application, representing another step forward in the project's development pathway.

While regulatory approvals are never guaranteed, the project is continuing to progress through the various stages required before development decisions can ultimately be made.

Although mining often creates images of deep underground operations or massive open pits, this project is materially different. It is a relatively shallow mineral sands operation, on farm land, with average mining depths around six metres and maximum depths of approximately nine metres.

Lower mining depths reduce extraction complexity, simplify rehabilitation planning and lower operational risk compared with many traditional mining developments.

The company has indicated that the disturbed mining footprint at any one time would only be approximately four hectares, with rehabilitation occurring progressively as mining advances.

The shallow nature of the deposit also allows the resource to be drilled and understood in far greater detail than many deeper mining projects. Over 270 drill holes have been completed, with drilling on 100 metre lines at 30 metre hole spacing, and samples collected at one metre intervals.

This provides a level of resource definition that is unusual for many early-stage mining projects and provides investors with greater confidence that the company is working with a well-tested and well-understood resource.

The company already holds resource consent for the initial mining area and has consent for a mineral separation plant near Rapahoe.

It is also worth noting that the initial mining area and mineral separation plant were consented through the traditional Resource Management Act process, including public submissions, hearings and Environment Court proceedings.

The Fast-track application relates primarily to extending the resource area and mine life rather than creating an entirely new project from the beginning.

The project's most distinctive feature is its grade. Barrytown contains one of the highest global in-situ valuable heavy mineral grades, reportedly almost five times higher than many comparable mineral sands projects internationally.

Many mining projects are promoted on size. However, in practice, it is often grade that determines whether a project becomes commercially attractive. Higher grades mean less material must be mined, transported and processed to achieve the same production outcome. The result is lower capital requirements, lower operating costs, a smaller disturbed footprint and faster progressive rehabilitation.

Combined with shallow mining depths, extensive drilling and an already well-advanced consenting pathway, it is not difficult to see why the project has attracted international attention.

Another interesting part of Tāiko’s approach is its focus on processing.

Historically, many mineral sands projects export mixed concentrate offshore. Once exported, overseas processors separate the minerals, refine them and capture much of the economic value.

Rather than shipping this mixed concentrate offshore, Tāiko intends to separate the individual minerals here in New Zealand before sale. This should improve pricing outcomes, reduce dependence on overseas processors and allow more of the economic value to be retained locally.

If New Zealand is going to develop natural resources, thinking carefully about where value is created is important.

Another example of how quickly this environment is changing is Santana Minerals.

Mining projects do not succeed on geology alone. As projects start to mature, financing, permitting, technical studies, environmental management, engineering design and political certainty become increasingly important.

Santana’s Bendigo-Ophir project has now moved materially further through the Fast-track process than many investors may realise. The statutory decision date remains 29 October 2026, with a draft decision expected at least six weeks beforehand.

Public Fast-track documents now include more than 30 Expert Panel minutes, multiple technical conferences, site visits, specialist evidence, legal submissions and concurrent hearings across disciplines including groundwater, planning, ecology, economics, transport, landscape, geotechnical engineering and environmental management.

The scale of this process highlights how much the conversation has shifted. The focus increasingly appears to be on management plans, consent conditions, groundwater work and technical refinements rather than whether there is a project at all.

Santana has recently been asked to provide updated management plans and proposed consent conditions by 22 June.

None of this suggests approval is guaranteed, but we remain hopeful. If this application were declined, it would raise broader questions about New Zealand’s ability to attract capital into large-scale resource developments.

Environmental opposition will always exist, with debate around water, landscape effects, ecology and broader environmental considerations.

Santana is aware of these concerns and will address legitimate issues carefully through the consenting process, while also responding to claims which are inaccurate or not supported by the evidence.

Further south, Rua Gold represents a different type of resource opportunity, with most investors still viewing the company primarily through the lens of gold, even though that description increasingly understates what management appears to be building.

The more interesting part of the Rua story may be antimony, a metal that receives far less attention than gold, copper or lithium because most people have never heard of it. Antimony is becoming increasingly important across batteries, semiconductors, flame retardants, industrial manufacturing, photovoltaic equipment and defence applications.

Products ranging from ammunition to night vision equipment rely on antimony in various forms, while China’s dominance of global supply chains has reminded investors and governments how vulnerable supply chains can become when production and processing are concentrated in a small number of jurisdictions.

Rua’s Auld Creek project combines gold with antimony, and management has increasingly positioned the project around this critical minerals opportunity rather than gold production.

However, antimony is interesting because demand is increasingly influenced by defence procurement, supply chain resilience, export restrictions and national security concerns, alongside traditional industrial demand.

As geopolitical competition increases, antimony has moved from being viewed simply as an industrial metal to being recognised as a resource with strategic importance.

Tāiko and Rua are not identical projects. One is focused on mineral sands and value-added separation. The other combines gold with strategic antimony exposure in the Reefton Goldfield.

The common thread is that both projects sit within a changing global environment where supply security, processing capability and resource independence are becoming more valuable.

Over recent decades, New Zealand has become more hesitant about resource development while continuing to discuss the need for higher productivity, stronger exports and greater economic resilience. Those goals need to be reconciled with the reality that modern economies depend on minerals.

Renewable energy systems, advanced manufacturing, defence capability, artificial intelligence infrastructure, data centres, telecommunications networks and batteries all require raw materials.

The real question for New Zealand is not whether resource extraction occurs, but where it occurs, under what standards, and who benefits from it.

Mining should be scrutinised carefully, with high expectations around environmental management, community engagement and rehabilitation.

However, rejecting credible projects simply because they involve mining becomes harder to justify when New Zealand is also seeking higher productivity, stronger exports, regional investment and more resilient supply chains.

It is also becoming increasingly difficult to say no to mining given the benefits it can bring to local communities through jobs, taxes and royalties. Mining has, and will continue to, transform local communities.

The West Coast provides an interesting example. It already has infrastructure, communities with mining experience, established transport networks and a long history of resource development. Projects developed in regions that understand mining often face different challenges from projects attempting to establish entirely new industries.

What stands out is that these projects are no longer concepts on a map.

Santana is progressing through the Fast-Track process. Rua is advancing what may become one of the most strategically important antimony projects in the country. Tāiko has assembled a combination of high grades, shallow mining depths, extensive drilling, existing resource consents and value-added processing that is uncommon within the resource sector.

We continue to believe New Zealand possesses far more strategic value than it often gives itself credit for. Strategic resources, regional capability, existing infrastructure and growing global demand create opportunities that are likely to become increasingly important over the next decade.

Clients interested in learning more about Santana Minerals, Tāiko Critical Minerals or Rua Gold, particularly those comfortable with higher-risk and more speculative investments, are welcome to contact our office.

We would be happy to discuss these companies in greater detail and whether they may be appropriate within the context of your overall portfolio.

Infratil Bond Issue

Infratil has announced a subordinated capital bond issue. The offer is for a 31-year bond, first redeemable after six years. Like similar capital bonds on our exchange (such as CEN090), the bond is priced assuming it will mature after six years on the initial optional redemption date.

The bonds, paying 5.50%, will also be listed on the NZX, allowing investors to exit the investment whenever they would like.

Infratil is to raise $150 million, with the option to accept unlimited oversubscriptions. The bond will carry an investment grade credit rating of BBB-, two notches below Infratil’s own rating (BBB+). This discrepancy is to account for the subordinated nature of the capital bond.

Investors wishing for a FIRM allocation should contact us as soon as possible with their CSN and amount they wish to invest.

Paraparaumu Seminar

The first of our seminars this year will be held at Southwards, Paraparaumu at 10.30am on July 7. Please contact us via email if you would like to attend.

New Financial Advisor Position

We are currently looking to add an experienced Financial Adviser to the Chris Lee & Partners team.

This is a long-term role based in Paraparaumu, working closely with our long-standing clients throughout New Zealand.

If you are interested in learning more, please contact us confidentially at office@chrislee.co.nz

Travel

24 June – Lower Hutt – David Colman

26 June – Napier – Edward Lee

30 June – Christchurch – Chris Lee (FULL)

1 July – Christchurch – Chris Lee (FULL)

Chris Lee & Partners Limited

Taking Stock 4 June 2026

Chris Lee writes:

Heartland Bank Merger

THE recent news that Heartland Bank is to merge with TSB Bank will inject confidence into financial markets.

It will surprise no serious financial market participant, having been mooted for at least a decade, often discussed in Taking Stock.

People like the late Lloyd Morrison, his brother Rob Morrison (former Kiwibank Chairman), and Bill English have all discussed the need for bank consolidations. Given Infratil founder, the much admired Lloyd Morrison, died 14 years ago, this first step towards NZ banking consolidation is hardly a surprise.

What may be a surprise is the timing, the merger coming at a time when NZ business confidence is low, and prospects look bleak, with no obvious plan to reduce national debt, and much childish talk in the media against projects that can quickly increase tax revenues, productivity and average wages.

The transaction values TSB at $620 million, which is 76% of its book value, implying book value is bolstered by intangibles.

It values Heartland's shares at $1.25, a price immediately achieved on the share market upon announcement of the news this week.

Heartland's nett cost, payable in cash, seems to be low tens of millions given the structure of the deal, with TSB effectively funding most of the cost.

TSB is owned by TOI, a community trust tasked with supporting groups in Taranaki.

As the sole shareholder, TOI would never be my idea of an ideal overseer of a bank, though it no doubt has some nice people on its community-elected board, as well as some caring people focussed on their charitable grants.

The new bank will be chaired by one of New Zealand's most successful and admirable business leaders, Greg Tomlinson, himself a foundation shareholder and board member of Heartland Bank, and now a 7% shareholder of the proposed bigger organisation.

Building a stronger governance and executive team will be a major task for Tomlinson.

The TSB began life in the 1980s when there were many regional savings banks, including the Auckland Savings Bank, the Wellington Savings Bank, Canterbury Savings Bank and several others.

Many of these merged to create Trustbank, which Westpac acquired under that brand name when it was building its NZ scale.

The Auckland Savings Bank and the Taranaki Savings Bank had declined to be part of Trustbank, the Auckland bank eventually selling to the Commonwealth Bank of Australia (as ASB Bank).

Taranaki held out and has operated as a mildly profitable, folksy provincial bank owned by the Taranaki Community Trust, which has a community-elected "foundation" board that elects the directors to govern the bank.

For 21 years TSB was managed in a kind, cautious manner by Kevin Rimmington, then successfully by Kevin Murphy till 2018.

Since then TSB has had two female CEOs, Donna Cooper and the current CEO, Kerry Boielle, who may take up a management role in the new bank.

All the way through these 38 years the bank has had a board that was a mix of community people. 

The directors appointed by the community foundation are a bunch of people with varying backgrounds, none of whom would fit my description of a natural director of a bank.

My definition is irrelevant.

TSB bank was a community bank and offered simple products with a low level of complexity, low margins, low risk, an emphasis on social matters, and no obvious ability to compete with Australian banks.

It certainly has not failed to connect with Iwi, both the foundation and the bank having directors with strong Treaty commitments.

While TSB has been operating as designed, New Zealand has been debating how a New Zealand-owned bank could compete effectively with the admirable Australian banks.

Scale – size – matters.

In the late 1990s the government had missed a chance to buy the National Bank of New Zealand from Lloyds Bank, which was keen to sell. ANZ bought it. Hmm.

So Kiwibank was formed, as a welfare bank, its promoter being the late Jim Anderton, a socialist with precious little connection with commerce.

After a tough few years, Kiwibank morphed under excellent management, though starved of capital and never free from the constraints of a bumbling Crown ownership structure.

By 2010, when Heartland was formed, TSB was making modest profits. The PSIS (now the Co-operative Bank) was fumbling but surviving, and the Southland Building Society (SBS Bank) was eking out a role in the South Island. Kiwibank was becoming a small but serious bank.

It was fairly obvious to me, and many others, that a grand merger of Kiwibank, Heartland, TSB, SBS and the PSIS bank would collectively provide NZ with a genuine home-grown banking option. Today, the ideal merger would be based on Kiwibank.

The topic was regularly discussed, and has continued to be discussed for 15 years, sometimes raucously, in Taking Stock.

Heartland has now succeeded with what may be the first step towards a New Zealand bank with a wider range of services and with scale.

The Heartland NZX listing, with access to capital and to capital market disciplines, will open new doors for the TSB.

Wellington mumbles about Kiwibank's muddling Crown constraints.

Opportunistic Kiwisaver salesmen salivate at the thought of getting privileged discounted access to a Kiwibank sharemarket listing. Ignore them.

Might Heartland's first step with TSB be given two or three years to merge effectively, demonstrate the benefits of scale, and then be the vehicle to re-ignite an adult discussion about a truly sizeable NZ bank, such as we have not had since the destruction and subsequent forced sale of BNZ?

Remember BNZ's collapse was principally caused by dreadful government inattention to mundane issues like banking supervision and capital controls.

Such goofiness is unlikely to recur, meaning a scaled new bank, listed and with access to capital, would not be likely to follow the BNZ's crazy fast route to hell.

Under the new name of TSB Heartland, the current merged banks might increase earnings per share, and build a more diverse, resilient organisation. There would then be hope that one day, NZ will own a competitive sizeable bank.

The next steps will be to allow Tomlinson the chance to build a board and an executive management that achieve those goals.

How he would love to have the now departed National Bank of New Zealand's outstanding banker, Sir John Anderson, helping him to achieve his vision!

Wellington Property Market

THE Wellington commercial property market tells the story of a capital city crippled by previously dreadful leadership and by fear of the future.

Commercial property sales are almost nil as, under pressure, vendors fear a vicious round of formal devaluations if sales focus at current offered prices.

Newly developed residential property, townhouses etc are recording almost no sales, as developers fight to hold out their lenders, in hope of recovering at least their cost prices.

Buyers, of which there are potentially many, are also holding out, expecting even greater discounts in a market that would be even further depressed were lending rates to increase, as forecast.

In a city dominated by left-wing politics, obvious solutions are ignored. For example, neither the council nor Kainga Ora have been buying the hundreds of townhouses now selling at or below cost, despite the pressure on government and local government to provide ever-larger numbers with shelter.

Wellington could not avoid the damage done by the Christchurch, Kaikoura and Seddon earthquakes.

Ancient water and sewerage pipes do not function better after being heavily shaken.

Wellington could have found better solutions had it not employed a council chief executive who was inept and detached from her “board of directors”.

More so, it needed a wise, experienced, commercial mayor, such as it now has, thankfully.

Instead it appointed a dysfunctional young woman with no meaningful commercial training, inadequate social skills, and no leadership qualities.

A functional council led by a competent mayor would have advanced the most obvious first step.

Inner-city living was that first step.

Many old buildings, once occupied by small business, had demonstrated good “bones” by surviving the big earthquakes.

Developers bought buildings, refurbished them with apartments, and looked to university students and others to buy market rents.

Student numbers fell, not surprisingly given the gap between university ideology and job market requirements, the concept created by Ardern’s government unsurprisingly failing.

Her government preached university education should be the goal for all. The job market begged to differ. I hate to label Victoria University as a hotbed of irrelevant socialists but that is how it presents itself, through the media.

Shorn of overseas and domestic renters, the inner-city rentals were in need of council and government support.

The simple answer was a council or government rental guarantee, leading to lower rentals (less risk for the developer) and a rise in inner-city numbers.

All over the western world there is evidence that bigger numbers in inner-city living refreshes economies, leads to a small security risk (and thus cost) and a more united city.

Councils which provide a rental guarantee lead to an increase in developments, lower rentals and, most importantly, do not involve the sort of public debt required to build.

Wellington, a city built around central government and thus public servants, elected a mayor with neither experience, knowledge, nor wisdom.

Sadly, some false statistics told a misleading story. These falsely based statistics told Wellington and New Zealand that Wellington was the most productive per-head city in New Zealand, its citizens having an exceptionally high average salary.

Here is the explanation.

Gross Domestic Product (GDP) divided by income-earners provides a figure of individual productivity. Wellington’s figure is high.

GDP is calculated by adding up all the sales and value created - in New Zealand’s case perhaps close to $300 billion. To that figure is added the cost of the public sector; not the value or sales of the public sector; the cost.

So if Wellington has more public servants and pays them higher salaries, GDP goes up! If the cost is $150 billion GDP rises to $450 billion.

The public sector is on average paid more than the private sector.

The false calculation method “proves” that Wellington is more “productive” than the Waikato, or Taranaki, or Canterbury, or Southland; or anywhere.

This methodology does not reflect “productivity” or “value” in any definition I understand.

I see cost, with virtually no value, in many government entities. (Thankfully, ACT looks on from the same angle).

Wellington now has a genuine leader, the former leader of the Labour Party, Andrew Little.

It needs right now to restore the inner city, attracting new residents by encouraging developers, and by enabling sales to recommence.

Infratil Bond Issue

Infratil has announced a subordinated capital bond issue. The offer is for a 31-year bond, first redeemable after six years. Like the other similar capital bonds on our exchange (such as CEN090), the bond will be priced assuming it will mature after six years on the initial optional redemption date.

The bonds will also be listed on the NZX, allowing investors to exit the investment whenever they would like.

Infratil is to raise $150 million, with the option to accept unlimited oversubscriptions. The bond will carry an investment grade credit rating of BBB-, two notches below Infratil’s own rating (BBB+). This discrepancy is to account for the subordinated nature of the capital bond.

The offer opened Tuesday (2 June), with FIRM offers closing at 10am this Friday, 5 June. 

These bonds will carry a minimum interest rate of 5.50%.

Investors wishing for a FIRM allocation should contact us as soon as possible with their CSN and amount they wish to invest.

Ryman Bond Offer

Ryman Healthcare is considering an offer of 6-year fixed-rate, senior, secured bonds.

The interest rate has not yet been set, although given current market conditions, we expect the rate to be around 5.70% per annum, fixed for the full 6-year term.

Ryman is also likely to pay the transaction costs, meaning clients are unlikely to pay brokerage. This will be confirmed when the full offer documents are released.

Ryman is New Zealand’s largest retirement living and aged care provider, with 47 retirement villages across New Zealand and Australia. It provides homes to more than 15,500 residents and employs around 7,800 staff.

Ryman has been through a major business reset over the past two years. Its latest result showed a meaningful improvement, including its first positive free cash flow result in more than a decade, with revenue increasing to $849 million.

The company has also reduced its debt level to 27.8% (which is the lowest in the sector), has no bank debt maturing until FY31, and is continuing to release cash from asset and land sales. Ryman has indicated that its focus is now on improving aged care earnings, reducing vacant stock, lowering capital expenditure, and strengthening cash flow from its existing villages.

In our view, Ryman is now in a much better position than it was two years ago. The company has moved away from its previous high-growth development model and is now focused on cash flow, debt reduction, and disciplined capital management.

Full details of the offer are expected next week.

If you would like to register your interest, pending further information, please contact us promptly with the amount you may wish to invest and the CSN you intend to use.

Please note that an indication of interest does not create any obligation or commitment to invest.

Paraparaumu Seminar

The first of our seminars this year will be held at Southwards, Paraparaumu on July 7. Please contact us via email if you would like to attend.

New Financial Advisor Position

We are currently looking to add an experienced Financial Adviser to the Chris Lee & Partners team.

This is a long-term role based in Paraparaumu, working closely with our long-standing clients throughout New Zealand.

If you are interested in learning more, please contact us confidentially at office@chrislee.co.nz

Travel

8 June – Nelson – Chris Lee (FULL)

9 June – Blenheim – Chris Lee (FULL)

30 June – Christchurch – Chris Lee (FULL)

1 July – Christchurch – Chris Lee (FULL)

Chris Lee & Partners Limited