FNZ has booked a record ‘comprehensive’ loss of more than US$900 million for calendar year 2024 as higher operating and acquisition costs swamped increased revenue.
The red ink result, over 60 per cent higher than the 2023 total loss of US$563.2 million), comes as the global investment platform giant faces potential legal action from a group of disgruntled employee shareholders over alleged unfair equity dilution by FNZ institutional owners.
According to the FNZ 2024 accounts, the business was down US$713 million last year after tax on normal operations with other extraordinary items (such as currency adjustments) blowing out the overall loss to US$911.1 million.
Global platform revenue, however, rose to almost US$1.6 billion from US$1.4 billion in 2023 and more than US$1 billion of operating income after associated fees and commissions.
Almost all other operating costs jumped year-on-year (bar staff expenses that fell to US554 million from US$633 million) to almost US$1.6 billion.
In the 2023 FNZ annual report, then chief executive, Adrian Durham, noted the company expected to reach “break-even on a go-forwards basis during 2025”.
But the Wellington-domiciled entity experienced a major upheaval last year including a senior executive reboot that saw Durham replaced by Blythe Masters and a US$2 billion plus debt and equity refinancing deal that has pitted institutional shareholders against an unspecified number of employees.
“The Group’s cash flows and liquidity have been impacted by acquisitions in recent years, expanding into new markets, and the continued investment into developing new products, whilst also enhancing existing and creating new customer relationships,” Masters says in the FNZ 2024 report.
“The 2025 budget assumes further investment to alleviate the impacts experienced from this growth. This investment is also forecast to generate additional revenue and realise cost efficiencies.”
She says the business completed another US$500 million equity capital-raise earlier in 2025 in a “pivotal further investment to provide financial strength to support FNZ’s long-term business plan”.
In a release last week, the still-anonymous staff (represented by law firm Meredith Connell) allege that the company has raised some US$1.5 billion from institutional and private equity shareholders on “uncommercial terms” including warrants issued to Canadian pension scheme, Caisse de dépôt et placement du Québec (CDPQ), and Singapore sovereign wealth fund, Temasek.
The warrants enabled the large shareholders to acquire FNZ Class A shares at US$0.25 each “compared to a potential market price of US$130,000”, the release says.
“Based on FNZ’s most recent publicly available enterprise valuation of US$20 billion, the fair market cost of these shares should have been US$3.6 billion, not US$7,000.
“… Our institutional and PE investors each handed themselves a package worth billions, and in doing so have obliterated the value of the shares held by employee and former employee shareholders, who built the company.”
The release says other institutional equity-holders including the Canadian Pension Plan, Motive Partners (where Masters is a principal) and the Al Gore-run, Generation Investment Management are also likely to execute FNZ warrants on similar terms.
While the staff group missed a previously flagged May court filing for the dispute, the letter says the legal action continues.
“FNZ employee shareholders are now bringing their case to the High Court of New Zealand in what will be one of Asia Pacific’s largest class actions of its kind.”
Established in 2003 by Durham inside the First NZ Capital wealth advisory group – now known as Jarden but soon to take on the JBWere brand under the new FirstCape ownership structure – FNZ has grown into a global mega-platform business, boosted by a series of acquisitions over the last few years, with about US$1.8 trillion of assets under administration.
The company increased impairments to US$85 million last year following a “holistic review” with a US$32.5 million of US-based FNZ Asset Management Solutions.
FNZ also reduced the ‘goodwill’ component of its share of the NZ-based Hatch Invest share-trading platform to US$45 million from US$50.8 million last year.
The accounts note, too, that after the 2024 balance date “the Group is now ultimately controlled by its institutional shareholders”.