Russian billionaire invests in Kiwibuild to help housing crisis

A Russian billionaire with luxury accommodation in Northland is expanding his stake in New Zealand by investing in affordable housing.

Alexander Abramov, who built a $ 50 million luxury cabin complex on an estate in Helena Bay, north of Whangarei, is investing in New Zealand real estate development through a vehicle called Targa Capital.

The company partners with real estate developers and has the consent of the Overseas Investment Office (OIO) to invest in seven residential real estate developments in New Zealand over three years.

All shares in Targa Capital are owned by Endurance Capital, whose directors are Moscow-based businessman Ian Cochrane, Auckland businessman Chris Seel and Auckland lawyer Geoffrey Hosking. Seel owns all of the Endurance shares.

Abramov’s stake in Targa was revealed in a 2019 request to the OIO for investment approval for investments that could be related to sensitive lands.

In the application, Targa revealed that it was eventually controlled and received most of its funding from Abramov, who made his fortune buying mines and steelworks in Russia and Ukraine.

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Abramov New Zealand representative Chris Seel, who is based in Albany, outside Auckland, said he could not disclose the amount of the total planned investment, but that “everything we do is with a partner from New Zealand “.

So far they had been associated with four organizations and had completed 11 projects, mainly in Auckland, but also in Wellington and Queenstown. The projects were low-end, high-quality, affordable apartments, Seel said. Two developments were Kiwibuild projects. Kiwibuild uses price caps to set the maximum price for which a KiwiBuild home can be sold.

“We really see the affordable housing opportunity in New Zealand. It is really obvious that there is a great need and the government wants people to do it and New Zealand developers are limited in terms of their finances. We want to be part of that, ”he said.

“We were operating before the foreign owner ban and this caused us to stop supporting developments for about 18 months, which I don’t think was in New Zealand’s best interest, but it took so long to figure out what the rules were and go through the process to continue “.

Targa and its associated entities limited themselves to supporting apartment developments with more than 25 homes.

Seel said Abramov liked New Zealand and “I’m here and we’re doing it in partnership.”

Abramov invested millions in the 215-hectare coastal property in Helena Bay in 2009 and transformed it into an estate with a luxury gated complex with a 25-meter pool. One of the conditions of his purchase was that he had good character.

The OIO has confirmed that it questioned Abramov or his representatives about the allegations stemming from a massive cache of documents from the defunct Ukio Bank in Lithuania when considering the investment application in 2019. The documents were obtained by the Organized Crime and Corruption Reporting Project based in Sarajevo. (OCCRP) in 2017.

An OCCRP report, based on 1.3 million bank transactions from 238,000 companies in the documents, revealed what it claimed was a network of complex deals that moved Russian money to and from shell companies, some of which appeared to be linked to Abramov and his business between 2006 and 2013.

The report claimed that two companies linked to Abramov appeared “deeply intertwined with Troika Laundromat, a network of shell companies that operated from 2006 to 2013, moving at least $ 4.6 billion (NZ $ 6.41b), allowing its users to hide assets, evade taxes or launder money ”.

The OCCRP said the Ukio documents did not contain any specific evidence that a company or its employees broke any laws or committed crimes.

Seel said the accusations were “unfounded.”

The OIO said that part of its evaluation of the investment application involved seeking and receiving direct comments from Abramov and his representatives on the allegations in the OCCRP report.

“The accusations could not be substantiated,” he said.

“We are satisfied that the applicant has demonstrated that the investor test is met and the applicant is likely to meet the additional mandatory conditions of consent,” the consent said.

“The applicant believes that the proposed investments will result in an increase in the number of residential homes built in New Zealand.”