Waikato Innovation Park seeks investor to grow

Media release
4 April 2017

Waikato Innovation Park seeks investor to bring $180 million growth vision to life

Waikato Innovation Park, a unique business park that leverages collaboration in the agribusiness industry, is seeking an investor for its property arm to grow the Park to the next level.

The Park, which sits on 17 hectares of land in Hamilton, opened in 2004 with the aim of clustering businesses to help drive economic growth. It is now worth about $25 million, has four buildings including a spray dryer, and is home to 46 tenants who have more than 1600 staff between them (including 562 working onsite at the Park and 1049 offsite). A master plan for the future growth of the park shows the potential for it to house 2500 staff, add another 12 buildings and be worth $180 million within 20 years.

The Park is distinctive in New Zealand in that it was established with public money and funding from WEL Energy Trust, the government and Hamilton City Council. It provides a collaborative environment for innovators in agribusiness and more than two thirds of its tenant firms are exporters - collectively their gross turnover was more than $427 million in 2016, up 42 per cent from $300 million in 2015.

Waikato Innovation Park Board CEO Stuart Gordon says the purpose of the Park won’t change as a property investor comes on board. “The purpose and vision of the Park not only remains the same but will be enshrined in the agreement that an aligned investor signs,” he says. “The Park will always support innovation and economic development through the clustering of unique-but-linked business, and multiple layers of protection will ensure that. This is the DNA that’s made the Park so successful and it will remain unchanged.”

Mr Gordon says the Park is so popular that any new space being generated is generally secured by existing tenants, rather than tenants who are new to the Park. The Park therefore needs to grow substantially to accommodate demand.

Hamilton City Council Executive Director Special Projects Blair Bowcott says the search currently being undertaken is about finding a private investor with a strong understanding of the Park’s core economic development purpose and a passion to achieve the master plan which will boost the Park to 32,000 sq m of zoned and designed space within 20 years.

Investors will be buying the Park’s assets at the latest independent valuation. They’ll be expected to invest a total of about $70 million over the next 20 years to achieve the Park’s growth goals, Mr Bowcott says. “We’ve contracted Deloitte who have already been conducting best-fit analysis as part of a robust process to find the right investor.”

“We’re looking for investors who can truly visualise the master plan for the Park and will retain the make-up of our tenants who are technology-based, driven by innovation and export-focused, and many of these are in the agricultural, agribusiness and food processing industries. It’s this cluster-effect that gives superior yields on these types of technology parks around the world.”

Hamilton City Council has wholly owned Waikato Innovation Park since 2013, but has determined it is not the right party to act as property investor to achieve the Park’s next phase of growth.

Mr Bowcott says the Council is a strong supporter of the concept of the Park which plays a vital role in achieving economic development benefits for the city, region and nation.

“Through a detailed strategic review of Hamilton City’s assets in recent months, we have determined that investing in the future of the Park is vital. It is a very high-preforming asset but investing at the level required to achieve the Park’s growth goals is not core business for Hamilton City Council.” Mr Bowcott says the Council’s capital priorities are centred around core infrastructure needs for a growing city.

He says the vision of the Park has been, and will continue to be achieved. “Waikato Innovation Park is a huge economic success story for Hamilton and the Waikato, and the Council has been very proud to have invested and helped make it a success to this point. The time has come now for investors to pick up on the new vision and fund the future growth.”

Tainui Group Holdings Ltd, the commercial arm of Waikato-Tainui which owns the land upon which the Park sits, has been informed about the sale.

Hamilton City Council will remain strongly involved in Waikato Innovation Park’s subsidiary, NZ Food Innovation Waikato, which owns the spray-dryer building on site. About $4 million of the sale proceeds of the property arm of the Park (equivalent to the initial government seed funding) will be channelled back into NZ Food Innovation Waikato.

The balance of the sale proceeds will go back to Hamilton City Council for debt reduction and community projects.

Deloitte New Zealand is managing the sale process for the Park on behalf of the owner, Hamilton City Council, and will discuss the opportunity with potential investors in the coming weeks.

Key dates in Waikato Innovation Park Ltd’s history:

2001
Innovation Waikato Ltd established with the Katolyst Group as the founding shareholder.

2002
Hamilton City Council grant of $2 million.
Ministry of Economic Development grant of $2 million to construct a core facilities building; establish and operate a technology commercialisation office; establish and operate an incubator for technology businesses.

2003
WEL Energy Trust grant of $2 million for development of Stage 1 of Waikato Innovation Park.
Construction completed on Core Facilities Building Stage 1.

2004
Construction completed on Core Facilities Building Stage 2.

2008
Industry NZ/MRI grant of $4 million to help fund the cost of building of a second building, and to support the off-shore business development activity of Innovation Waikato Ltd.
$2.4 million of equity comes from Hamilton City Council in support of the second building.
$3.95 million grant from Ministry of Economic Development to support the cost of construction of the spray dryer.

2009
Construction completed on second building.

2010
NZ Food Innovation (Waikato) Ltd established.

2012
Waikato Innovation Park Ltd established.
Construction completed on spray dryer facility.

2013
Katolyst Group shareholding transfers to Hamilton City Council.

2014
Callaghan Innovation invests $3 million to NZ Food Innovation (Waikato) Ltd.
Construction of third building for Tetra Pak.

2015
Master plan for Waikato Innovation Park Ltd unveiled which will see it grow from a $25 million asset into a $180 million asset within 20 years.

2016
Investment sought to fund master plan for Innovation Park.

© Scoop Media