Invercargill City Forests Ltd (ICFL) has bought a 24.9% stake in Invercargill-based forestry management company IFS Growth Ltd and its harvesting brand, OneForest.
IFS Growth was founded in 2001 and operates nationwide, with offices in Invercargill, Dunedin, Upper Hutt and Kaitaia.
ICFL chairman Les Pullar, of Waikouaiti, said while he could not disclose how much ICFL had paid, the shares were "reasonable value''.
The investment should enable ICFL to increase the annual dividend paid to the ICC and used to offset rates, he said.
At present the annual dividend was about $550,000. It was hoped to increase that by about $200,000.
"We are in it to make money for ICFL, and consequently for ratepayers.''
In a joint statement with Mr Pullar, IFS Growth managing director Dan Minehan said the move would strengthen both businesses.
Mr Minehan said his company had been implementing growth plans strongly over the past few years, including moving into Wellington and Northland. It had also developed significant overseas customers, predominantly in India and China.
"This purchase means that our business will be going even harder and faster in terms of strategic growth as we leverage each other's strengths.''
Mr Pullar said for the past 15 years, IFS Growth had managed ICFL's forestry assets throughout Otago and Southland. That included just under 3000ha of forests owned by ICFL and forestry blocks for which ICFL had bought harvesting rights.
ICFL had now expanded to the point where it needed to invest in forestry management, he said.
"Buying a stake in IFS Growth made sense ... because it allowed us to broaden our skill base, add greater security in terms of service provision and also provided a further financial return.''
The arrangement took effect on June 1, he said. He and ICFL director Alastair McKenzie, of Invercargill, also joined the IFS Growth board on that date.
