NEW ZEALAND - Canada Pension Plan Investment Board (CPPIB)'s long-running attempts to acquire a stake in Auckland International Airport (AIAL) collapsed last week after the New Zealand government refused to approve its application under the Overseas Investment Act.

The C$119.4bn (€73.5bn) pension scheme's takeover offer required OIA approval to become unconditional. Yet, despite acceptance of the offer from a critical mass of 29,000 shareholders and hard-won approval from a reluctant board, the government effectively blocked the deal.

The Overseas Investment Office cited as factors in its decision jobs, export receipts, investment for development purposes, and state control of strategically-important infrastructure.

The move reflects protectionist moves designed pre-emptively to block efforts by sovereign wealth funds to gain control of strategic assets. CPPIB's leadership has strenuously denied it is a sovereign wealth fund.

In a statement issued last week, CPPIB said it was "disappointed" by the move but declined further comment. It is understood the scheme is unlikely to appeal.

It headed off government attempts to block foreign ownership of strategic infrastructure assets last month by gaining 57.7% shareholder approval for a 39.2% stake in the company. AIAL's shareholders include New Zealand's public pension fund, which holds 6% of assets.

The scheme had also agreed to reduce its voting power on shareholder resolutions not affecting its shares to 24.9%, and to limit the number of CPPIB-nominated directors to 25%.

The domestic press has been largely critical of the regulator's decision, and the New Zealand Herald, in particular, commented: "Who would relish leaping through hoops and then be abruptly dismissed? The [earlier] Dubai bid fell foul of xenophobia and decision-making that owed more to politicking than rational judgment. [This] verdict…comes from the same school. Airport shareholders will feel the immediate pain. All airport users will suffer the lasting consequences."

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