The Tauranga Energy Consumer Trust (TECT) has put out a tender to manage over $100 million after selling down almost 20 per cent of its stake in Trustpower.
Bill Holland, TECT chairman, said while the board hasn’t formed a fixed view on where to invest the money, it is likely to end up in a diversified portfolio of equities and fixed income.
Holland said TECT would probably split the portfolio between two providers with sharebrokers as well as asset management firms such as Russell and Mercer potential candidates.
Prior to the sell-down, TECT held virtually all of its assets in Trustpower shares, which funds an approximate average yearly dividend of $450 to western Bay of Plenty (BOP) power consumers and $8-10 million in annual donations to local community projects.
“As a consumer trust we weren’t obliged to diversify the portfolio but the board decided a couple of years ago it would be prudent thing to do,” Holland said.
TECT raised more than $150 million in last month’s share sale, which lowered the trust’s stake in Trustpower from 33.2 per cent to 26.8 per cent. The process was managed by Craigs Investment Partners.
He said TECT needed to keep at least a 26 per cent share of Trustpower to ensure the firm’s constitution could not be altered.
According to Holland, about $25 million of the proceeds would be used to pay down debt and a further $10-20 million would be set aside to fund local “angel investment” projects.
He said TECT would work with Quayside, the investment arm of the BOP regional council, and possibly other groups such as local Iwi to establish the angel investment vehicle.
“If we can grow business in the area that has to be beneficial,” Holland said. “But it will be a genuine investment and we will be expecting a return [on the angel funds].”
He said TECT may also use some of the Trustpower share proceeds to develop a property to house itself and other local not-for-profits.
“But it will be on commercial terms,” Holland said.
TECT’s total assets are currently valued at about $775 million, including the $150 million share sale proceeds which have been placed on three-month term deposits.
Earlier this month, Bruce Cronin, TECT deputy chair, was also named Trustee of the Year by the New Zealand Trustees Association (NZTA).
Cronin, who ended an 18-year stint as manager of BayTrust last December, has been a TECT trustee since 1996.
In a statement, NZTA said the award is based on: trustee ability; significant achievements during the previous year, and; “contribution to trusteeship within New Zealand”.
“In addition to the customary cup, Bruce’s Award also includes a year’s complimentary membership of the NZTA and up to $5,000 worth of services from Accounting firm Grant Thornton – for him to allocate to a not-for-profit organisation of his choice,” a TECT release said.