New owners could transform Wellington-originated investment platform business, FNZ, from a regional big fish to a global whale, UK media reported last week.
According to the UK Money Marketing publication, private equity players would be the most likely bidders for the two-thirds’ stake in FNZ currently held by incumbent private equity managers, HIG Europe and General Atlantic. FNZ was reportedly on the market at a total company valuation of up to £2 billion – or about NZ$4 billion.
“Commentators have ruled out a platform or fund provider being the purchaser because FNZ underpins so many businesses in the market it would be too challenging to handle conflicts with competitors,” Money Marketing says.
The report says another private equity “injection” could help FNZ expand beyond its traditional European and Australasian stomping grounds.
“It has a presence in Asia-Pacific and Europe but has not entered the US and some commentators question if it could compete with companies in that market that already have a strong foothold and dwarf FNZ when it comes to their valuation and assets under administration,” the article says.
Established in Wellington in 2004 as an offshoot of broking firm First NZ Capital, FNZ has about NZ$420 billion in assets under management – a figure that will jump by more than $50 billion once its new German acquisition is finalised.
In a departure from its historical organic growth strategy,FNZ bought investment platform, ebase this July from German bank Comdirect for about NZ$260 million. Comdirect said earlier this month the deal would net it a before-tax profit of almost NZ$150 million.
“The reason for the sale is a stronger focus on the fast-growing B2C [business-to-consumer] core business,” a Comdirect statement says. “The transaction is still subject to the approval of the banking supervisory authorities and antitrust authorities and fulfilment of the contractually agreed closing conditions. The sale is expected to be concluded in the current year.”
Following the ebase news, UK media reported last month that HIG Europe and General Atlantic had hired investment bankers to sell their FNZ holdings, representing about two-thirds of the company’s equity. If it goes ahead the sale of FNZ “would likely crystallise the place of the firm as one of the most valuable companies in the United Kingdom in its sector”, Finance.co.uk reported.
“Both HIG Europe and General Atlantic own stakes that are equating to one third each in the firm, while the remaining third is owned by the management team of FNZ that is led by Adrian Durham, its chief executive,” the report says. “Sources said that Durham, together with his colleagues were not planning to sell significant chunks of their shares.”
If the sale goes ahead at the upper end of the reported wide £1 billion-2 billion valuation range, FNZ would be worth about 60 per cent of NZ’s most famous tech company, Xero, which had a market cap of almost NZ$7 billion based on the latest share price.
FNZ, which has about $15 billion under administration in the NZ market for a range of institutions and advisory firms, did not respond to a media query for this story.