Kiwi Group Holdings has confirmed the sale of funds management business and KiwiSaver default fund provider Kiwi Wealth to Fisher Funds for $310 million.
It says the deal will see Kiwi Wealth integrated into Fisher Funds over time, with Kiwibank, Kiwi Wealth's sister company, referring KiwiSaver customers to Fisher Funds.
"Kiwi Wealth's more than 270,000 members will be gaining access to Fisher Funds’ award-winning advice and active investment team," Kiwi Group Holdings chairwoman Paula Rebstock says in a statement.
Fisher Funds CEO Bruce McLachlan says the priority is on working closely with Kiwi Wealth "to ensure a seamless transition for all members and clients involved."
Fisher Funds says it wants to retain Kiwi Wealth’s default provider KiwiSaver status, but there's a formal approval process to be worked through. Fisher Funds lost its role as a default fund last year after a government review, while Kiwi Wealth retained its position as a default fund provider.
According to Morningstar's latest KiwiSaver survey, Fisher Funds had $6.5 billion worth of assets under management at June 30, and Kiwi Wealth had $6.3 billion. That makes them the fourth and fifth biggest KiwiSaver fund managers, respectively. Combined, they'll leap frog Westpac to become the third biggest behind only ANZ and ASB.
Kiwi Wealth started out as Gareth Morgan Investments and was bought by Kiwibank in 2012 for $57.225 million.
In Kiwi Group Holdings' statement, Kiwibank CEO Steve Jurkovich says the partnership with Fisher Funds will enable Kiwibank to continue to offer KiwiSaver and other wealth products to its customers. TSB also markets Fisher Funds' KiwiSaver products through its branches.
The acquisition requires Overseas Investment Office approval because Fisher Funds is 34% owned by the US-based TA Associates. Fisher Funds' other shareholder is Toi Foundation Investments, which is ultimately owned by the TSB Community Trust, the parent of TSB Bank which bought into Fisher Funds in 2013, taking controlling ownership in 2017.
Kiwi Group Holdings is owned by NZ Post, the NZ Superannuation Fund and Accident Compensation Corporation. It sold life insurer Kiwi Insurance to NIB for $45 million last November.
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"In 2012, certain members of TA Associates leadership, independent of the firm, began financially supporting various conservative political action groups backing candidates in favor of repealing the Dodd–Frank Wall Street Reform and Consumer Protection Act publicly claiming it was "government regulation run amok."[8] Landry was among of the leading Super PAC donors to the 2012 Mitt Romney presidential campaign.[9] Landry told the Boston Globe the Dodd-Frank legislation costs TA more than $600,000 a year in compliance-related costs which would be better spent supporting job growth fueled by private equity firms such as Bain Capital and TA Associates.[10]"
The problem, not the solution.
It is understood the mooted Kiwi Wealth sale was triggered by a desire by ACC to exit its Kiwi Group Holdings shares.
http://investmentnews.co.nz/investment-news/kiwi-wealth-sale-enters-fin…
Is ACC inflating the value of its holdings by swapping Kiwi Wealth for cash to then offload these shares for a higher return?
This could also be their attempt to reduce their exposure to NZ's housing bubble, already having a large proportion of its business levies coming from the likes of construction companies and subbies.
Something to note here is that ACC would have to offer its shares to an existing shareholder (Post and Super) first and then to the Crown before going out to external buyers.
Of course but food for thought...
"In 2014, TA Associates helped organize a syndicated loan worth $1.77 billion for Millennium Health LLC. Most of the loan – $1.27 billion – was channelled back to TA Associates and others, who used it to hand out special dividends.[11] Shortly thereafter, Millennium Health LLC declared bankruptcy.[12] Voya Investment Management, the creditor, subsequently, and unsuccessfully, filed a racketeering lawsuit against TA Associates and Millennium Health founder James Slattery.[13]"
I’m also really disappointed in Kiwibank. The purpose of the whole enterprise is to grow a viable 5th bank. Why sell off a clearly valuable component? Sounds like they need capital. If only they were owned by an entity that had access to unlimited capital at a cheap price. Yes, I know they aren’t owned by the government directly but they could have worked something out from the $50B+ we spent in the pandemic.
"In 2014, TA Associates helped organize a syndicated loan worth $1.77 billion for Millennium Health LLC. Most of the loan – $1.27 billion – was channelled back to TA Associates and others, who used it to hand out special dividends.[11] Shortly thereafter, Millennium Health LLC declared bankruptcy.[12] Voya Investment Management, the creditor, subsequently, and unsuccessfully, filed a racketeering lawsuit against TA Associates and Millennium Health founder James Slattery.[13]"
Hmmm...
"In 2012, certain members of TA Associates leadership, independent of the firm, began financially supporting various conservative political action groups backing candidates in favor of repealing the Dodd–Frank Wall Street Reform and Consumer Protection Act publicly claiming it was "government regulation run amok."[8] Landry was among of the leading Super PAC donors to the 2012 Mitt Romney presidential campaign.[9] Landry told the Boston Globe the Dodd-Frank legislation costs TA more than $600,000 a year in compliance-related costs which would be better spent supporting job growth fueled by private equity firms such as Bain Capital and TA Associates.[10]
In 2014, TA Associates helped organize a syndicated loan worth $1.77 billion for Millennium Health LLC. Most of the loan – $1.27 billion – was channelled back to TA Associates and others, who used it to hand out special dividends.[11] Shortly thereafter, Millennium Health LLC declared bankruptcy.[12] Voya Investment Management, the creditor, subsequently, and unsuccessfully, filed a racketeering lawsuit against TA Associates and Millennium Health founder James Slattery.[13]"
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