Allied Farmers boss says he has talked with distressed asset investor Bluestone

Allied Farmers managing director Rob Alloway says he has talked to Irongate Properties’ saviour Bluestone Group, which has NZ$500 million ear-marked for opportunities in the troubled finance company sector, about "various things."

Fresh from loaning Irongtae NZ$45 million to repay its retail bond holders, Bluestone CEO Peter McGuinness told interest.co.nz yesterday his company was “actively working on” a number of further opportunities in the New Zealand finance company sector. McGuinness said Bluestone was especially interested in property lending, development loans and consumer assets and had upwards of NZ$500 million to invest should the right opportunities arise.

Although McGuinness declined to name any specific companies or assets that might interest Bluestone, Alloway said he had spoken to the Bluestone team on a couple of occasions on various issues.

“We’ve even thought about what place they could play in terms of some of the peripheral opportunities around the rural sector as well,” Alloway said.

Asked if any deals with Bluestone were pending, Alloway said there was nothing that Allied Farmers wanted to discuss with the media at the moment.

“(But) we do know them, it’s a pretty small space in terms of that kind of financing.”

Bluestone's funding comes from US investment group Varde Partners, a distressed asset investor.

Allied Farmers acquired Hanover Finance’s loans and property interests in a deal valued at NZ$396.2 million last December. It has since written-down value of its Hanover interests by 69% to just NZ$124 million.  Allied Farmers also operates Allied Farmers Rural, a rural services business, and Allied Nationwide Finance, which had its credit rating downgraded to B with a negative outlook by Standard& Poor’s in June.

Opportunities that might be of interest to Bluestone, which bought Provincial Finance's receivables ledgers from its receiver two years ago, include the loan books of failed property financiers Strategic Finance and St Laurence, which their receivers are considering selling. There’s also struggling South Canterbury Finance, which needs about NZ$180 million of fresh equity to bring it in line with its trust deed by August 31.

Alloway said he wouldn’t put Allied Nationwide Finance in the same category as those three.

“It has different classes of assets and a lot more diversity in the book,” said Alloway. “But I think what we are going to see in New Zealand in this space is a lot of funds like this (Bluestone) taking advantage and making the best out of some of the opportunities out there, which is what we’ve done with Hanover, just in a different manner.”

McGuinness, meanwhile, said Bluestone was taking a “very close look” at the entire non-bank deposit taking sector.

"It’s an entire sector that has had a fundamental shift in the way that it needs to be funded," McGuinness said.

"That presents good quality opportunities for everyone to participate. And to the extent that they can provide funding that ultimately sees a return of 100 cents in the dollar to mum and dad investors, that’s a collateral benefit as well."

* This article was first published in our email for paid subscribers earlier today. See here for more details and to subscribe.