Update On SolarZero Liquidation By BlackRock

Background – impacts on staff, contractors and families

In November 2022 BlackRock, the largest investment fund on the planet, purchased SolarZero for $110m. BlackRock invested some $140m, bringing its investment to around $250m. On 26th November 2024, BlackRock unexpectedly liquidated SolarZero, to the surprise of staff.

Staff were asked to leave the building immediately and were not paid holiday pay or notice period. Contractors were not paid for work done in the month of November. All up around $4-5m is owed to staff and contractors. BlackRock has some NZD 19 trillion under management.

Many of the contractors are small, family owned electrical businesses that also install solar systems. Around $1m is owed to these 30 or so businesses.

All up some 250 families are impacted by BlackRock’s surprise decision to liquidate SolarZero. Nearly all employees and contractor staff spent the Christmas period on the unemployment benefit because it is hard to find jobs at this time of year.

Why did BlackRock liquidate SolarZero?

Over the Christmas period more information has come to light about why BlackRock liquidated SolarZero. The BlackRock Global Renewable Power 3 (GRP3) fund, a USD4.8b fund, invested in SolarZero and a number of other companies around the world. Many are start ups.

The liquidation of SolarZero seems to have been precipitated by at least one disastrous investment by BlackRock in NorthVolt. NorthVolt was a start up battery manufacturer in Sweden that went bankrupt. BlackRock lost some USD1.2b on NorthVolt from the GRP3 fund. That led to an across the board review of the investments that BlackRock’s GRP3 fund had made. The result was that SolarZero was liquidated. We do not know if any other companies that the GRP3 fund invested in were also liquidated.

A key reason for the surprise nature of the liquidation is that the information memorandum for SolarZero’s sale clearly stated that SolarZero would need cash injections until 2027, by which time it would become cash flow positive. The information memorandum is the document that describes SolarZero to purchasers, kind of like the information a real estate agent prepares for a house that is being sold.

The reason for SolarZero’s liquidation seems to have little to do with the performance of the business. It was tracking largely to what was set out in the Information Memorandum. What seems to have happened is a policy change in BlackRock. BlackRock has looked across its GRP investments and made some decisions about what to continue investing in and what not to.

Getting payment for staff and contractors – response of political parties

Both Labour and the Greens have written to BlackRock asking that staff and contractors are paid what they are owed, somewhere between $4 and $5 million.

Former SolarZero staff have repeatedly asked the Prime Minister to contact Larry Fink, the CEO of BlackRock who he met last year, and ask him to ensure staff and contractors are paid what they are owed. Christopher Luxon has not responded to SolarZero staff.

On this issue Christopher Luxon has been absent - not even missing in action. Just absent. As we all know small medium enterprises (SME) are the backbone of the New Zealand economy. Christopher Luxon seems much more supportive of huge international businesses, possibly due to his work background, than he is in supporting kiwi SMEs.

The big picture: Implications for global investment in New Zealand

For New Zealand, the $250m (the amount BlackRock has lost on SolarZero), is a large amount of money. It does not seem to be a large amount for BlackRock, who at a whim can change its policy and write off $250m. Just like that.

BlackRock’s behaviour leads to the question: Is BlackRock an appropriate investor for New Zealand?

The Government is keen to secure foreign investment in infrastructure and is planning a large infrastructure investment summit in March.

All SolarZero staff, contractors and increasingly commentators are asking what kind of investor the government wants. BlackRock has proved unreliable and fickle. At the flick of a pen or a small change in policy in New York they can cancel a major investment in the New Zealand economy. A tiny blip for BlackRock can have a major impact in a small country like New Zealand.

And BlackRock’s treatment of SolarZero staff and contractors is appalling.

Is BlackRock really the kind of investor that the Government should be courting?

$5m: Cost of BlackRock’s ticket to the infrastructure summit planned for March

If the government is indeed committed to courting BlackRock for infrastructure investment in New Zealand, then the government should charge BlackRock $5m as the entry fee to attend the infrastructure summit in March.

The $5 million will pay contractors what they are owed, pay SolarZero staff holiday pay and notice period. It would show that this government cares about SMEs, which are so important to the New Zealand economy.

If BlackRock does not pay they should be blacklisted from the event. The reasoning being is that they are just too unreliable and unpredictable. Paying $5m would be an admission from BlackRock that they need to do business differently in New Zealand differently. A payment of this size would go some way to putting things right for staff and contractors.

Both major political parties seem dazzled by BlackRock, but is BlackRock right for NZ?

Before the 2023 election, the Labour Government courted BlackRock and worked with BlackRock on setting up a NZD2b climate investment fund. Launched by the then Prime Minister, Chris Hipkins, the fund seems to have gone nowhere. Which in hindsight may not be a bad thing.

The current Prime Minister is also keen on BlackRock coming to NZ.

It is time for our political leaders to get real. Large investment funds and complex deals may not be the future for New Zealand infrastructure. As the ongoing uncertainty about who is responsible for what for Transmission Gully[1] (media link), complicated public private partnerships have not had great success.

BlackRock’s cavalier attitude to SolarZero, its staff and contractors raises questions about whether a fund the size of BlackRock is appropriate for New Zealand. It is simply too large and a tiny policy decision made in New York can have huge consequences for NZ.

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