The NZ government should soon have Kiwi Wealth off its books after reportedly lodging bids from three parties including Fisher Funds, Jarden and the Australian firm, Private Equity Partners (PEP).
It is understood a decision is imminent following a drawn-out process dating back to at least the start of this year with one of the two local players likely favourites to pick up the approximately $9 billion Kiwi Wealth.
If successful in its bid, the now $15 billion Fisher would vie with ASB for the title of second-largest fund manager in NZ while also replacing Westpac as the third-biggest KiwiSaver provider.
Fisher has swallowed four other schemes on its way to accumulating about $7 billion in KiwiSaver, most recently buying the Aon NZ funds. Aon reported roughly $1 billion under management as at sale-date last December with almost $800 million in its KiwiSaver scheme and the remainder in an employer superannuation master trust.
The Fisher angle has a few other hooks, too, with the manager part-owned by US private equity firm, TA Associates, which also has a majority share in Russell Investments. Russell NZ is one of the core managers for the Aon schemes. TA owns a third of Fisher with the Toi Foundation (previously known as the TSB Community Trust) taking up the remaining shares.
Jarden, meanwhile, holds just over three-quarters of Harbour Asset Management, which has investment mandates with a range of KiwiSaver schemes. Previously known as First NZ Capital, Jarden embarked on a capital-intensive foray in Australia in 2020 to build an investment banking empire.
In 2010 Fisher bought the First NZ Capital KiwiSaver scheme, which had about 650 members and $9 million at the time of the sale.
With A$8.6 billion under management PEP touts itself as the “largest and most active Private Markets Fund Manager in Australia”. PEP has been involved in major buy-out deals on both sides of the Tasman, although not in the wealth management sector.
Kiwi Wealth is a subsidiary of Kiwi Group Holdings (KGH) – a consortium of government entities including NZ Post, the NZ Superannuation Fund (NZS) and the Accident Compensation Corporation (ACC).
Over the last 12 months KGH has sold off the group’s life insurance arm and the Kiwi Wealth-owned Hatch investment platform – fetching $40 million plus apiece. In addition to Kiwi Wealth, KGH owns Kiwibank and mortgage-broking firm, NZ Home Loans.
Behind the scenes, KGH also tidied up its share register in April this year after redeeming 300 million shares formerly owned directly by the Crown (acting via the Finance Minister). NZ Post now owns 53 per cent of KGH with NZS and ACC holding 25 per cent and 22 per cent, respectively.
In March this year Paula Rebstock, KGH chair, confirmed the board had hired Goldman Sachs Australia to “test market interest” in Kiwi Wealth.
But given the government ownership links and its recent reappointment as a default KiwiSaver provider, Kiwi Wealth remains a politically sensitive asset. It is understood the mooted Kiwi Wealth sale was triggered by a desire by ACC to exit its KGH shares.
Kiwibank bought the-then $1.5 billion Gareth Morgan Investments business in 2012 for $50 million, later converting the KiwiSaver and private portfolio manager into Kiwi Wealth under the KGH structure.
Kiwi Wealth reported about $6.6 billion in KiwiSaver funds under management as the end of March with perhaps a further $2.5 billion to $3 billion held in private wealth portfolios and a retail fund range.
Based on the rule-of-thumb multiple of 3 per cent of assets under management for valuing fund businesses, Kiwi Wealth should fetch at least $270 million.