Kiwibank recruits industry veterans Leo Davis and Stephen Cole to help with its fledgling finance company Kiwi Asset Finance

By Gareth Vaughan

Kiwibank has brought two industry veterans on board to help establish the state owned bank's fledgling finance company, Kiwi Asset Finance.

Endeavour Securities Limited, whose directors and major shareholders are Leo Davis and Stephen Cole, has bought a 20% stake in Kiwi Asset Finance, which Kiwibank - itself a subsidiary of New Zealand Post - launched in late 2010 to provide term loans to businesses buying capital assets such as machine tools, earth moving equipment, commercial trucks and trailers and motor vehicles.

Davis managed Nationwide Finance for 21 years up to 2000 where Cole - now Kiwi Asset Finance's CEO - was executive director from 1994 to 2001. Prior to his stint at Nationwide, Cole worked for ANZ's UDC Finance. More recently the two have been at the helm of Business Finance, which like Kiwi Asset Finance specialises in loans to companies buying assets such as vehicles and machinery.

Davis and Cole are directors of Kiwi Asset Finance as well as 20% owners through Endeavour.

A Kiwibank spokesman said there's a sale and purchase agreement in place whereby Kiwibank will buy back the Endeavour stake at a later date meaning Kiwibank classifies the finance company as a 100% owned subsidiary. The spokesman wouldn't say when the buy back may occur but did say such deals can be dependent on performance factors. He wouldn't say how much money Kiwi Asset Finance has lent to date and neither Davis or Cole could be reached for comment.

Kiwibank's General Disclosure Statement for the year to June 30, 2011 shows the bank tipped almost NZ$4 million into Kiwi Asset Finance through the issue of almost 4 million Kiwi Asset Finance shares to Kiwibank at NZ$1 each. Kiwi Asset Finance subsequently issued another 100 shares to Kiwibank taking its stake to 4 million shares exactly and then issued 1 million shares to Endeavour.

Cole told interest.co.nz in 2010 that Liberty Financial, then a 50% shareholder, had the option to acquire all or part of the half stake in Business Finance owned by Cole and fellow co-founder Davis on or after June 30, 2011. Liberty, which is controlled by Australian based former McKinsey consultant Sherman Ma, is now the 100% owner of Business Finance.

Kiwi Asset Management says its loans are secured by the assets its borrowers are buying themselves, or against other existing assets if additional security is required. Its website says businesses can borrow up to 100% of the purchase price of the new asset with loans starting from NZ$20,000 on offer for terms of six to 60 months.

Earlier this week Kiwibank bought Gareth Morgan Investments for an undisclosed sum as it steps up its involvement in the funds management and KiwiSaver industries.

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