Jan.18 (BusinessDesk) - Government pension and savings funds collectively own more than 5 percent of 47 companies listed on the NZX and more than 10 percent of 17 companies.
The analysis of combined market power of Accident Compensation Compensation, New Zealand Super Fund, Government Superfund and National Provident Fund is disclosed in an annual portfolio report by Treasury's Crown Ownership Monitoring unit.
The level was not excessive but there was limited scope for more investment, given the size of the NZX, the report said.
"This means CFIs would need to look at private market opportunities in which to invest or move to a more passive approach in investing in New Zealand equities."
The review also discloses $199.2 million of expenses, including staff costs, to manage the Crown financial institutions' (CFIs') funds in 2011/12, $110.7 million of which for the Super Fund.
The analysis found they had $3.5 billion worth of investments as at June 29, 2012, equal to 6.3 percent of the NZX's capitalisation and 9.6 percent of its freely floating capital.
"Where the combined holding across the CFI portfolio totals more than 10 percent there is potential for CFIs to represent a significant percentage of voting rights should they each choose to vote in line with each other," the report said.
The reality is that they employ external managers, which limits their ability to work together.
CFI's collectively own 15.6 percent of Skellerup, 14.4 percent of Auckland International Airport, 13.9 percent of NPT, 13.5 percent of Restaurant Brands and 13.2 percent of Ebos.
Kathmandu, Fisher & Paykel Appliances, Kiwi Income Property Trust, AMP NZ Office, Diligent, Infratil, DNZ Property, SKY City Entertainment, Argosy, Nuplex, Pumpkin Patch and NZX itself are also on the list of combined holdings in excess of 10 percent.
The aggregate $3.5 billion worth of shares in NZX-listed companies as at June 29, 2012 is up 30 percent from the level as at November 30, 2009.
The ACC, which managed investments in house, was the most efficient of the CFIs in terms of investment management costs.
"It is encouraging to see that over the past two years the active investment strategies employed by the CFI's have in aggregate added value after fees to the Crown's CFI portfolio," the report said.