Wellington-based Trustees Executors (TE) could fetch up to $150 million with at least three Australian firms vying for the business.
Late in January the Australian Financial Review (AFR) reported the about-to-be-listed share registry firm Link Market Services and Equity Trustees are both in the running to pick up TE, which was first tipped for sale last October.
It is understood ASX-listed financial services company IOOF was another contender for the New Zealand trustee business.
Andrew Barnes, chair of Perpetual NZ (now incorporating Guardian Trust), told Investment News his firm was also interested in TE.
Barnes said the TE sale was running through a “structured process” with final bidders yet to be revealed.
The AFR story said TE’s adviser on the deal, UBS, would be calling for second-round bids on February 5.
At the same time, TE has shed at least one long-time senior executive with Yogesh Mody, southern regional corporate trust manager, finishing up with the firm late in January. It is understood that TE’s northern regional corporate trust chief, Clynton Hardy, will also leave the business shortly.
In January Craig Gibbs, former head of TE investment services, also departed the firm for an advisory role with Forsyth Barr in Wellington.
Rob Russell, TE executive director, declined to comment on the sale progress.
Perpetual’s Barnes said TE’s touted price of $150 million was probably based on recent sales activity in the Australian trust company market.
Last April Equity Trustees (EQT) paid A$150 million for ANZ Trustees, which reported earnings before interest and tax (EBIT) of A$11 million, which is understood to be close to TE’s estimated EBIT. The previous year EQT lost out in a bitter tussle over the listed Trust Company, which was eventually picked up by Perpetual Investments (Australia) for A$241 million.
“There’s no real benchmark for the purchase of trust companies in New Zealand – except for the deals I’ve made,” Barnes said.
Barnes bought Perpetual Trust for $12.3 million in January 2014 before paying $68.5 million (in a joint venture with Milford Asset Management) for Guardian Trust in April of that year. He bought out Milford’s share of Guardian just three months later for an undisclosed sum.
According to Barnes the heightened market taste for trustee companies is based several factors: a huge inter-generational wealth transfer due to take place over the next couple of decades; regulatory pressure in both Australia and New Zealand driving demand for trustee services, and; low interest rates making funding takeover deals viable.
TE, which oversees and administers about $80 billion, is owned by Sterling Grace, a vehicle of Switzerland-based US investor, John Grace.