CCHL review recommends strategy to improve income and value

Christchurch City Council should set a clear strategy to generate further income and value from its investment arm Christchurch City Holdings, a strategic review has found.

Councillors will consider a report at the Wednesday 7 December meeting which outlines the findings of the CCHL strategic review by Northington Partners.

CCHL is a wholly-owned investment arm of the Council established in 1993 which has shareholdings in six key companies including Christchurch International Airport, Lyttelton Port Company, Orion NZ and Enable Services.

In 2021 Council determined that after nearly 30 years in existence it was timely and appropriate to  review our commercial holding company.  The scope of the review considered whether the purpose and strategic objectives of CCHL were still valid given current and future challenges the city and region are facing.

The findings of the review state CCHL is a “significantly under-utilised asset of the Council and city ratepayers” and that “significant value could be added by taking a more active approach to asset management.”

The report recommends Councillors approve key pieces of work to achieve this:

• The Council develop a clear Value Strategy in relation to building and utilising income or value from CCHL, and
• that CCHL be requested to scope and develop detailed business cases which fully considers the costs and benefits of adopting a hybrid approach to managing the portfolio, including rebalancing and returning capital to council

The review says the strategy should be primarily informed by Council’s long-term requirements with a deliberate balancing of its target capital structure, financial capacity, investment requirements and an acceptable rates path.

This will allow Council to tailor its portfolio to best meet shareholder requirements.

This work would take up to 12 months and be considered as part of the next Long Term Plan 2024-34. The public would then be able to provide their input into any potential outcomes.

The report to Council also recommends a number of other “operational improvements” in relation to improving the relationship and engagement with Council/CCHL and its subsidiaries whilst maintaining its core purpose of providing an independent non-political buffer between the Council and its commercial companies.

The review included more than 50 interviews including, but not limited to, existing directors and executives for the subsidiaries and CCHL, key Council staff and executive and former Councillors.

Read the full report here.