A long-established Australian asset consultancy firm has gone live in the NZ market for the first time in a surprise agreement with the Tauranga Energy Consumer Trust (TECT).
The recently wired deal will see Frontier replace Fidato Advisory as investment adviser to the more than $1 billion regional energy trust.
Frontier emerged out of the Australian industry superannuation sector a stand-alone asset consulting business in 1994, reporting about A$500 billion in funds under advice at the last count.
But while Australian competitor, JANA, has landed several NZ clients in recent years, Frontier had not stepped across the border until now.
In a statement, Frontier chief, Andrew Polson, said: “Although we have completed a deal of project work with a range of offshore clients previously, we’re excited to grow our client base in New Zealand. We’ve had a lot of feedback in recent years that our unconflicted and independent advice offering would resonate with New Zealand investors. We’re delighted to be chosen to help TECT manage its portfolio as it transitions forward.”
As reported in August, TECT tendered for a new asset consultant earlier this year in a well-orchestrated succession plan ahead of an imminent restructure at the Tauranga-based trust.
Wayne Werder, TECT general manager, said in the release that the group selected Frontier based on its “cultural alignment and a preparedness to tailor an approach to help the Trust navigate its current growth aspirations”.
“TECT is evolving and planning for the next growth phase for the portfolio. As part of that, the trustees are keen to broaden our investment opportunities,” Werder said. “Frontier’s endowment and foundation experience, but also their preparedness to work with us to operate in a way that will both support our community and manage the portfolio’s funds responsibly, really stood out.”
Post the change, TECT will create a formal investment committee, the release says.
The trust hired Fidato in 2015 to create a diversified portfolio after selling down shares in its key asset holding, Trustpower. After Trustpower sold its stake in Tilt Renewables in 2018, the TECT diversified portfolio expanded further and will again following the planned sale of the retail energy business later this year.
According to the TECT 2021 annual report, the diversified portfolio amounted to $453 million at the end of March with the Trustpower holdings valued at $690 million. TECT owns about a quarter of the Trustpower energy business.
Partly triggered by the Trustpower retail divestment, TECT has tabled a restructure plan – due for court approval next month – that will split the entity into a legacy fund and a perpetual charitable entity.
Werder said in August the TECT restructure could see some changes to underlying managers,
Currently, the TECT diversified portfolio managers include: Vanguard and Mercer for global equities; Nikko and QuayStreet for Australasian shares; and, Mercer for unlisted property and infrastructure.
Nikko also runs the TECT cash portfolio while the fund also has allocations to nine, mainly NZ, private equity managers.
Polson said TECT was the fifth client-win for Frontier this year but its first international success for the period.
Last month Frontier appointed well-known Australian superannuation identity and former chief of the United Nations Principles for Responsible Investment (PRI), Fiona Reynolds, as an independent director.