Fisher Funds has emerged as the no-surprises winner to take out the approximately $9 billion Kiwi Wealth investment business in a deal destined to cement the Takapuna-based firm as the second-largest fund manager in NZ.
It is understood Fisher paid about $310 million for Kiwi Wealth, which has been shopped around by its government-linked owners for the last six months at least, beating out other local contenders Booster and Jarden in the process. Fisher and Kiwibank will maintain a distribution relationship under the deal.
Post-settlement, Fisher should jump to about $24 billion in funds under management (FUM) – ahead of the $20 billion ASB – including a combined KiwiSaver tally of over $13.5 billion.
ASB last reported about $14 billion in its KiwSaver behind the $18.5 billion plus held by market leader, ANZ.
As well as super-charging Fisher FUM, the Kiwi Wealth purchase returns the manager as a default KiwiSaver provider just seven months after losing the status. Fisher along with four other managers was stripped of the long-held default credentials in the second seven-yearly review of the regime last year.
Kiwi Wealth won reappointment as a default provider, hastily converting the scheme to daily unit pricing after hiring MMC as retail registry provider. Over the last few years, Kiwi Wealth has been reforming its investment back-office systems inherited from the purchase of Gareth Morgan Investments (GMI) in 2012, appointing BNP Paribas Securities Services to do most of the heavy-lifting. Fisher uses Trustees Executors for most of its back-office services.
In a statement, Fisher chief, Bruce McLachlan, said: “This is an exciting moment for Fisher Funds and will further strengthen our position as a leader in New Zealand’s active funds management business.
“As a business founded in New Zealand, we’re delighted to welcome another great New Zealand business of the calibre of Kiwi Wealth into the Fisher Funds family.
Our priority is now on working closely with Kiwi Wealth to ensure a seamless transition for all members and clients involved,”
Fisher has been the most-acquisitive firm in the KiwiSaver and retail funds market after first taking out the tiny First NZ Capital KiwiSaver and investment arm in 2010 before buying the almost $200 million Huljich scheme the following year.
In an even more ambitious play in 2013, Fisher bought the roughly $4 billion Tower Investments business for almost $80 million – more than quadrupling FUM in the process and adding a default KiwiSaver scheme to boot: Fisher continues to run the former Tower KiwiSaver as a separate scheme under the Fisher Two brand.
Fisher Two has more than $3 billion under management while the main Fisher KiwiSaver holds about $4 billion.
And last year Fisher added the Aon KiwiSaver and employer super scheme to its kitty, bringing a potential total of about $800 million in FUM for a purchase price of $32 million. Fisher is in the throes of converting the third-party managed Aon funds to its own investment strategies. In July the group on-sold the smaller Aon employer superannuation master trust (comprising about $200 million in funds under management to Lifetime Retirement Income for $3.7 million.
Russell Investments managed over $500 million for Aon while Milford held more than $200 million with the rest split between ANZ and Nikko.
Toi Foundation (previously the TSB Community Trust) is the major shareholder of Fisher while US private equity firm, TA Associates, owns the remaining third.
TA Associates has stakes in over 25 wealth management firms globally including Russell Investments and two Australian fund managers – BetaShares and Yarra Capital Management (formerly Nikko Australia).
Meanwhile, Kiwi Group Holdings (KGH) – the entity that owns Kiwi Wealth and Kiwibank – has been trimming its non-bank assets over the last year, offloading the life insurance business in 2021 for about $45 million. Earlier this year, Kiwi Wealth also sold its in-house developed US share-trading platform, Hatch, to FNZ for $40 million.
NZ Post owns just over half of KGH with the NZ Superannuation Fund and the Accident Compensation Corporation holding 25 per cent and 22 per cent, respectively.
After exiting Kiwi Wealth, KGH owns only Kiwibank and mortgage-broking business NZ Home Loans.
Kiwibank initially sold a badged Mercer KiwiSaver through its network from 2007 before launching its own AMP-managed scheme in 2010.
However, Kiwibank bought the-then $1.5 billion GMI business in 2012 for $50 million, later converting the KiwiSaver and private portfolio manager into Kiwi Wealth under the KGH structure.
The Fisher deal is expected to complete by the end of this year.