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Māori organisations navigate growth through financial innovation

Unlocking growth - Top 200

The original article was published on New Zealand Herald

Māori organisations, (which include Iwi and land entities) play a crucial role in New Zealand's economic landscape, contributing to the prosperity of their communities and fostering sustainable growth on a national scale. While the economy is volatile and times are tough across the board, commodity markets and international tourism are sectors particularly vulnerable to the impacts of economic downturn, and these happen to be the industries where many Māori businesses are concentrated. Export, fishing, agriculture, and tourism are highly exposed to international trends. Despite the economic conditions, this year’s Top 10 Māori organisations on the Deloitte Top 200 have seen continued success and growth. This success has come through financial innovation and courageous decision making.

Māori businesses, driven by cultural values, which include a commitment to the environment, their people and sustainable growth, employ a diverse range of capital structures to fund their expansion. Capital structure refers to the mix of debt and equity that a company uses to finance its operations and growth initiatives. In this year’s Top 10 Māori organisations there is a material difference in how the top four have used debt to fund their growth when compared to their more conservative peers.

Māori organisations have historically been conservative in their debt appetite when compared to corporate companies. Part of this conservatism may be linked to the history of land loss and struggle for Treaty of Waitangi settlement that many Iwi have experienced. However, we are now seeing the maturing of Māori organisations, and the application of debt has fuelled growth in these uncertain economic times.

In the case of the entities on the Māori Index in the 2023 Deloitte Top 200, we’re seeing debt financing for strategic growth used as a powerful tool amongst the most highly ranked business entities. Low-interest loans, lines of credit, and other debt instruments enable them to invest in revenue generating portfolios, especially property which we’ve seen increase throughout 2023.

Ngāi Tahu takes the top position once again, with total assets exceeding $2.2b and $1.77b in total equity. Waikato Tainui, with growth attributed to the success of Ruakura inland port and super hub, has maintained its number two spot, very closely following Ngāi Tahu in both total assets and equity.  Ngāti Whatua ki Orakei has held steady at number three.

The big movers are Ngāti Toa from the Wellington region and the top of the South Island. They were the 2023 winners of the Institute of Finance Professionals “debt deal of the year” award and have moved from 8th to 4th position. The deal saw them exercise Treaty settlement options to buy 40 schools backed by government leases. While the Iwi took on $368m of debt to complete the transaction, as an intergenerational investor it puts future generations in a strong financial position to benefit from its Treaty settlement.

By embracing collective ownership, engaging with iwi investment funds, leveraging government support, and approaching debt financing with cultural sensitivity, these enterprises are successfully navigating the dynamic business landscape. Their approach to capital structure stands as an example of how financial decisions can be rooted in cultural values while fostering economic prosperity for both their communities and the broader New Zealand economy. 

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