The flagged sale of the Complectus-owned Guardian Trust and Covenant licensed supervisory businesses to a Hong Kong-based entity could take “several months” to emerge from the regulatory sign-off process, according to Harry Koprivcic.
Koprivcic said the deal, inked with Tricor Group last week, requires Overseas Investment Office (OIO) approval, which took up to 180 days on average to assess complex applications during the 12 months to the end of June this year.
“There’s also been some recent changes to the law,” he said. “So it’s hard to comment on how long [the OIO decision] would take.”
Earlier this month the amendments to the legislation came into force to streamline the process, making it easier for some applications, OIO group manager, Anna Wilson-Farrell, said in a release.
“Some lower-risk investments no longer need consent which means we can focus more on complex investments and those that pose a higher risk,” Wilson-Farrell said.
Collectively, Guardian and Covenant represent 40 per cent of the NZ licensed supervisor sector by number (there are only five) and oversee some $250 billion including large swathes of the KiwiSaver market.
While Tricor is a Hong Kong-based entity, the group is ultimately owned by UK private equity firm, Permira, which boasts €44 billion (about NZ$745 billion) under management. Permira paid US$835 million to buy Tricor in 2016, completing the deal the following year.
Founded in 2000, Tricor now operates in 21 jurisdictions as a specialist in ‘outsourced corporate services’ such as corporate trust and debt services, fund administration and strategic business advice.
However, the Guardian/Covenant bid marks its first foray into the investment supervision business, Koprivcic said.
“But they understand the trustee role,” he said. “Tricor can add value to us with their corporate services and a strong financial backing that will support our continued investment in technology, for example.”
In the interim, Koprivcic said it would be “business as usual” at the two supervisory companies.
“The entire team will remain with the business and benefit from opportunities this global alignment offers,” the group said in a statement last week.
Under the proposed sale, the remaining Complectus assets – essentially the private client business Perpetual Guardian – will remain in the hands of current joint owners Andrew Barnes (through Coulthard Barnes Holdings – in turn owned by Bath Street Capital) and NZ private equity firm Direct Capital.
No sale price has been disclosed, however, Barnes tried to sell the complete Complectus to the now-defunct Australian firm, Sargon (known as Trustee Partners at the time), in 2017 for a reported $200 million plus. Prior to the Sargon offer, Complectus was shopped around for a potential listing on the ASX.
In the wake of the soured Sargon deal, Direct Capital acquired half of Complectus in August 2017 via a convertible loan agreement.
Barnes, who previously ran businesses in the UK and Australia, began the Complectus trustee firm roll-up in 2013 with the purchase of Perpetual Trust, adding Guardian the following year along with the smaller Covenant and Foundation (later folded into Covenant) firms in 2015.
According to a BusinessDesk report, last week Bath Street Capital also ended a long-running legal war with former Perpetual Trust owner, the George Kerr-controlled Pyne Gould Corporation (PGC).
The Barnes entity will hand PGC $13.5 million to settle claims over post-sale payments relating to the Perpetual deal, the report says.
Bath Street will “pay $6.75m immediately, with the balance coming either 15 days after the sale of Complectus, currently under negotiation, becomes unconditional or Feb 28 2022, whichever is the earlier”, BusinessDesk says.
More recently, Barnes has been championing the four-day week movement, parlaying wide NZ coverage into a global campaign.
Koprivcic said Guardian was implementing the four-day working week policy across the business.