Mainzeal's rich history

Mainzeal could be classified as a company which never quite found its feet.

Its operating arm, Mainzeal Property and Construction, was placed into receivership yesterday. 

Coverage of Mainzeal – and its parent company Richina – by the National Business Review reveals a company which had some good years, but often struggled to consistently turn a reasonable profit.

Mainzeal was founded in 1968 as a branch of Australian company Mainline Corporation Ltd to develop 28,000sq m of harbour-front land in downtown Auckland.

In 1969 Mainline Corporation became a publicly-listed company, changing its name to Mainzeal in 1975.

After the 1987 sharemarket crash Mainzeal struggled to balance a heavy asset load – mainly its property portfolio – against tightening cashflow.

It hit the June 1995 balance date with a $9 million operating cashflow deficit.

However, following the acquisition that year by a consortium led by China-based Richina the prospects of better returns increased as Mainzeal's new owner signalled a focus on development in the booming Asian nation.

Along with Mainzeal, Richina – founded by Mainzeal director Richard Yan – acquired leather processing business Mair Astley, which it turned into a full subsidiary, later adding a major tannery joint venture in Shanghai.

Shortly after Richina gained its controlling stake, it was revealed Mainzeal Group was chasing building contracts in Asia worth more than $150 million.

Office in Malaysia

It registered an office in Malaysia in April 1995, planning to use the contacts of its new shareholders to enter the Asian market and boost sagging profits.

In 1996 the company was renamed Richina Pacific, with Mainzeal remaining as the name for the construction arm.

As part of its development projects in China, Richina opened an aquarium in Beijing in November 1997.

It was officially opened by then National Prime Minister Jim Bolger in what was his last official destination as leader before returning to New Zealand to hand over to Jenny Shipley.

Ms Shipley went on to serve as chairwoman of Mainzeal Group – which has not been placed in receivership – until resigning, along with other directors this week.

Mainzeal was a relatively well-performing part of Richina's business around this time – in 2002 it had an operating surplus of $6.8 million, up from $2.3 million the year before.

But by 2004, Mainzeal was warning potential leaky building claims could eat into its profits, also blaming bad weather for project delays.

In the first half of 2004 it had made just $890,000 profit from $176 million revenue.

By mid-2005 Mainzeal's performance was looking woeful – its last six annual reports had revealed an average profit margin of just 1.2%.

In 2009 Richina delisted from the NZX after having its share price badly hit amid the global financial crisis.

While it secured some large projects in recent years – Auckland's $94 million Vector Arena, the $80 million Wellington Supreme Court building and Lion's $250 million redevelopment – it wasn't enough to turn around its cashflow problem.

Mainzeal still has a number of projects under construction, including the $250 million Manukau Institute of Technology campus, the $14 million redevelopment of Shed 10 on Auckland's Princes Wharf and the $67 million Hub project at Victoria University.

Richard Yan

Mainzeal's sole director – and founder of Richina – Richard Yan arrived in New Zealand in 1981, aged 17, with a borrowed $US26 and a Rotary scholarship enabling him to study at Auckland University.

According to interviews, he was the first student to leave China after the 1978 regime change.

Growing up during the cultural revolution in a single-room flat in the northern city of Tianjin, he has said his schooling in China was a waste of time – in the afternoon the children made envelopes.

He arrived in Auckland with only a watch, some clothes and a Playboy-brand belt.

After graduating from university with a Bachelor of Arts and a Bachelor of Commerce in 1985, he worked in Australia for Westpac, which sent him on a scholarship to Harvard Business School.

From there he worked for Bankers Trust in New York and Hong Kong but his mind was on the business opportunities to be found in China.

At the end of 1992 he returned to Beijing and set up Richina Group, using his Harvard contacts to raise $US53 million to venture capital projects in China.

It is not clear why he was attracted to Mainzeal in the first place – neither Mainzeal nor its majority-owned Mair Astley leather had any interests in China.

callison@nbr.co.nz