19 Oct 2009

Companies turn to overseas investors for cash

6:08 am on 19 October 2009

A lack of savings in New Zealand will increasingly force public companies to raise cash from foreign investors, some market commentators believe.

Rural services company PGG Wrightson announced on Friday that Chinese agricultural firm Agria Corporation will pay $36 million for a 13% stake in the company. The money will be put towards repaying $200 million of debt due in March.

Earlier this year Fisher & Paykel Appliances sold a 20% stake in the company to Chinese appliance maker Haier as part of a $200 million fundraising to reduce debt.

Brook Asset Management managing director Mark Brighouse says a lack of savings in New Zealand means there is no deep pool of capital for local listed companies, which turn to international investors for funding.

Keith Woodford, professor of agribusiness at Lincoln University believes Chinese companies are becoming an important source of funding for New Zealand firms.

He says they are running huge cash surpluses in international trading, while New Zealand companies are short of capital.