Active Investor Plus visa cash rules under review amid idle funds concerns

The “growth” category visa – which is by far the most popular and accounts for two-thirds of all AIP investment – has, in various ways, allowed visa holders’ funds to sit in cash for much longer than is broadly understood.

In addition, investors’ predilection, so far, is overwhelmingly for passive investing.

Lawyers and other advisers who work with them say that, while individuals vary, there is a very strong preference for the preservation of capital and for liquidity, allowing the withdrawal of funds at the end of the required investment period.

In the first year, from April 1, 2025 to March 31, just $19.6 million of all AIP investor funds (1.4% of the total $1.4b) went directly into investments, which suggests that just a tiny sliver of investors are actually getting involved with Kiwi businesses in an immediate way.

In contrast, $1.228b flowed into managed funds, the lion’s share, some $900m, into private credit funds; $389m went into corporate and government bonds; and $65.2m into listed equities.

When asked about the very modest levels of direct investment, Stanford emphasised that the real action in this area is still to come through the follow-on investments that AIP visa holders are expected to make, and which some have already made.

The anecdotes to bear this out and data aimed at corroborating it is being collected, she said.

But the data so far reveals some rather less comforting details, that quantity of fallow investor cash in the AIP system has certainly outstripped the level of direct investment to date. Indeed some say it has dogged the programme.

In December, the Government quietly killed off one avenue whereby visa funds are able to sit in cash for extended periods, but others remain.

AIP visas fall into two categories: balanced and growth.

The former requires a $10m investment over five years (though there are ways to reduce this by taking more investment risk) and allows investment in conservative public market assets: listed equities and bonds.

Growth, on the other hand, requires investment of $5m over three years, and the quid pro quo for the reduced investment total and timeframe is that the investments must be made into high economic value, growth-oriented, investment categories, limited to direct investments in businesses and managed funds, both of which must be approved for the growth purpose by officials at Invest NZ.

Permanent residence status is the prize, for both the investor and their immediate family.

In various forms, investor visas have been offered by New Zealand for decades. But the iteration that ran under the previous Government, from 2022 to 2025, was not well used and brought in less than $100m in capital.

In contrast, the current Government’s revised version, with looser rules, has gone off like a firecracker but the settings have required some adjustment.

In the eight months to December 2025, $172m of the $557.4m of investment that landed through the growth visa category went into “discretionary investment management services” known as DIMS.

This investment option was offered through asset managers including Craigs Investment Partners, Forsyth Barr and Shaw and Partners, and Alvarium, and, in many instances, investor funds were sitting in cash for a prolonged period.

Mark Lister, investment director at Craigs, said it was not his company’s practice to take a slow approach to deploying funds held in DIMS accounts, but it was clear that officials thought “that too much of the money was sitting in ANZ bank accounts”.

“I think some confusion arose around the DIMS, it’s not a fund product it’s a service. Investments that come into DIMS are at the managers’ discretion. They [the manager] could choose to put some or all of an investment into cash if they weren’t ready to invest it. I don’t know how much that was happening, Craigs didn’t operate that way, I don’t want to speak to others, it may have been a tiny issue,” Lister said.

But it doesn’t appear to have been a tiny issue. DIMS accounted for over 32% of the “growth” category visa investment last year, and several sources told the Herald that for one of its main suppliers, Forsyth Barr, it was ordinary practice to invest just a fraction of AIP funds quickly, in the order of 25%, and the company would then hold the remainder in cash at its discretion.

Full investment of the funds, even at the 12-month mark, was not always anticipated.

The Herald put questions to Forsyth Barr but a spokesman did not respond directly.

Stanford also noted that some DIMS providers were delaying investment because they were pooling AIP investor funds.

She said the DIMS option was closed off after multiple warnings to providers and on her instruction: “The intent of this visa and the instructions are that the money gets deployed … it was being pooled and we gave multiple warnings and behaviour didn’t change and I said right, that’s the end of that then”.

“This is not a golden ticket to come to New Zealand and leave your money in a bank account and get it back after three years…” she said.

Stanford said she remains ready to act if Invest NZ raises further concerns about cash holdings, though she said none are flagged currently.

Another way in which investor cash sits undeployed (or under-used) is while it’s waiting to be invested by fund managers – managed funds, including both private credit and private equity funds, are overwhelmingly the most popular investment vehicle for growth visa holders.

Visa money destined for managed funds can sit “on-call” waiting to be used within a fund, and during this period, which can take months or even years, the money may be held in cash or term deposits (up to 25%) and otherwise in listed equities and bonds.

During this time the clock is ticking down the required investment period (recall that the growth category visa holders are not otherwise allowed to keep their money in such conservative investments as listed stocks and bonds).

AIP visa advisers note that there are good reasons to allow money waiting to be called for deployment by managed funds to sit partly in cash and otherwise in highly liquid investments. Chief among these is that investors are contractually obliged to meet fund cash calls quickly when they come.

Sarah Wells, senior associate at law firm Dentons, said she has been working with golden visa investors across successive iterations of the programme for roughly a decade and it was important to see a bigger picture.

“I’d say 95% of golden visa clients invested more or retained their NZ investment after the required investment period. That’s really the big picture … the talent, expertise and capital this visa regime brings to NZ,” she said.

She also noted that investors will not necessarily be able to withdraw their investments at the three year mark.

Most private credit funds offer regular windows for redemption, however these terms can change, and private equity and venture capital funds typically require much longer-term investments.

Fund managers can also hold AIP cash within their funds, another instance in which the investment clock is ticking down for visa holders but in which their money is not actually deployed.

Acting director AIP Investments at Invest NZ, Simone Robbers, said officials do not mandate funds to deploy capital, however: “if approved managed funds require time to focus on deployment, they may be removed or suspended from the approved managed fund list to focus on transacting (and are not able to accept further AIP capital at this time)”.

Robbers declined to comment on particular managed funds.

Several sources close to the visa scheme told the Herald that Invest NZ has been concerned that some funds “have been sitting on too much cash”, especially private credit funds which hold the vast majority of growth visa investments.

However, pushing funds to invest more quickly is a delicate balance and risks prompting more risky and aggressive deployment.

The sources said that Private Capital Group (PCG) has been under some “soft pressure” from officials to invest the considerable influx of cash from visa holders more quickly – the group’s open-ended PCG NZ Debt Fund appears to be the single largest repository of AIP visa money and has attracted some $350m of AIP funds in just the last year, according to one of its founders, Paul Carmen.

Carmen rejected the contention that officials have had any concerns about the fund’s cash holdings. He said it holds roughly 20% in cash at any given time, which provides both for redemptions and for investment opportunities in the pipeline.

Carmen acknowledged that the influx of new money through the revised AIP scheme has been a “game-changer” for the fund and accounts for the overwhelming majority of its more than $500m size.

He said the fund has achieved steady deployment of that cash, with loan sizes that have crept higher as the fund has matured.

He also noted that Invest NZ tightened reporting rules for managed funds in the middle of last year – funds now report quarterly to officials on details including how much AIP money they’ve received and how much money they’ve invested.

“[Some] funds have struggled to answer those questions. I don’t know how they struggle to answer those questions but they have, and certain funds have been therefore removed off the list,” Carmen said.

He declined to name the funds that have struggled, but his view is that, broadly, the system is now working as it should.

Enda Stankard, a managing director at MA Financial Group and investment committee member of the AIP approved fund MA NZ Growth Fund, noted that a tension can exist between funds and their need for cash holdings and a government’s broad interest in the deployment of funds.

Australia recently cancelled its investment for residency visa programme, but earlier government rules limited managed funds approved for the visas to 20% cash holdings, Stankard said. He said the MA fund has had no difficulty in deploying cash.

Stanford told the Herald that Invest NZ has the tools it needs to keep very close track of funds’ investments.

There are rumours afoot that more changes are on the way for the visas, including possible changes related to cash rules or, more simply, a requirement to apportion at least $1m of growth visa investment to private equity, which typically allows more limited liquidity and so, once invested, funds are likely to stay invested for longer.

“They are just that: rumours,” Stanford said. However, she noted that she’s brought forward a planned review of the programme, now underway, to ensure that it’s working as intended.

Dentons’ Wells was phlegmatic about the possibility for more “tweaks to the system” as she described them. But others say that change comes at a cost.

Tim Williams, financial services lawyer and partner at Chapman Tripp, declined to comment on rumours and unannounced changes, but he noted that it would be helpful to reach a “steady state” as quickly as possible.

“It’s a new scheme. There will always be challenges with any new scheme. Broadly I think this scheme is going well ... but every time the goal posts shift, the changes add delays for businesses [seeking approval from Invest NZ] and it costs applicants money to make the necessary adjustments.”