A CHINESE investor is believed to be in due diligence ahead of buying a $NZ152 million ($142 million) New Zealand-owned portfolio of Tasmanian farmland.
The dairy farms are part of the New Plymouth District Council Perpetual Investment Fund and administered by Taranaki Investment Management.
New Plymouth councillors were scheduled to visit the farmland, collectively known as The Van Diemen's Land Company (VDL), in July as part of sell-off negotiations.
Chinese interests were understood to be meeting New Zealand consultants this month as part of due diligence.
Sources had told New Zealand-based Fairfax Media journalists the fund had failed to provide dividends under council ownership and overall profits had been poor.
The Perpetual Investment Fund was set up in 2004 after the council sold a 45 per cent share of Powerco to Australian-owned Prime Infrastructure for $259 million.
The fund was calculated at $NZ203.4 million in 2013. However, a NAB document acquired by The Australian Financial Review earlier this year showed the company was $67 million in debt.
NAB has also been in talks to sell its stake in the farmland. However, an oversupply of dairy farmland on the market has failed to lure buyers.
Since its formation, the council has received NZ$20 million in release payments annually.
However, in a bid to rebuild the fund, it will reduce its takings to $NZ10.4 million in 2013-14, $NZ9.4 million in 2014-15 and $NZ8.5 million in 2015-16.
Councillors have described farms as the New Plymouth council's most significant asset, accounting for two-thirds of the fund, which has drawn concerns the fund was over-exposed to an under-performing asset.
Despite being defined as a perpetual fund, Fairfax has reported the fund has depreciated from $NZ260 million to about $NZ241 million in nine years.
"It's no secret that TIML's balanced portfolio is out of kilter; I will be seeing just how close we are to divesting our interests," New Plymouth mayor Andrew Judd said.
On its website, the Van Diemen's Land Company says it owns and operates 25 dairy farms, a dairy support unit and a stand-alone heifer rearing operation.
While there is scope to expand the farms, conservationists have heavily criticised plans for a $180 million expansion to double milk production as threatening the already endangered Tasmanian Devil.
One potential buyer, the Chinese Investment Corporation, has withdrawn from negotiations. It was in talks with former Tasmanian premier Lara Giddings about acquiring an interest in VDL in 2013.