Fisher Funds is on track to complete its $310 million takeover of Kiwi Wealth by the end of November after gaining Overseas Investment Office (OIO) approval earlier this month.
Bruce McLachlan, Fisher chief, said the Kiwi Wealth deal should settle “in the coming weeks” post the OIO sign-off, paving the way for a conjoined funds business likely to rival ASB as the second-largest retail investment manager in NZ.
“…once complete, we will work through a transition period to create a combined market-leading investment business,” McLachlan said in a statement.
Fisher outbid earlier front-runner, Jarden, to secure the government-owned KiwiSaver and investment firm in August.
At the time Fisher had about $15 billion under management while Kiwi Wealth reported $9 billion or so but assets have since declined in line with global market movements. Fisher held over $7 billion across its two KiwiSaver schemes while the respective Kiwi Wealth scheme had about $6.2 billion under management as at the end of September, according to Morningstar figures: both firms manage other retail and wholesale assets.
The Takapuna-based manager has accrued several KiwiSaver schemes over the years, most recently buying the Aon funds last November for $32 million.
While the Aon transition was a relatively simple affair executed via a bulk transfer agreement, bringing the Kiwi Wealth and Fisher businesses together promises to be a more complex amalgamation of customers, investment styles, products and back-office arrangements.
“Fisher Funds and Kiwi Wealth customers will receive further information once the sale process is complete,” McLachlan said in the release. “In the meantime, it’s business as usual for the Kiwi Wealth and Fisher Funds teams as they continue to deliver for customers across New Zealand.”
The deal itself has been debt-funded by Fisher shareholders – the US private equity firm, TA Associates and the Taranaki-based community trust, Toi Foundation.
Toi owns about two-thirds of Fisher with the remainder held by TA. The TA stake triggered the OIO approval process for the Kiwi Wealth purchase.
McLachlan said the Kiwi Wealth debt would sit on the shareholder books rather than in the Fisher accounts.
Toi said in a statement: “We undertook this arrangement via our lenders (which are private credit funds) on normal commercial terms – there are no special covenants or other terms involved, and the level of debt incurred by each party is proportional to our shareholding.
“At Toi Foundation we take a prudent and conservative approach to all of our investment decisions. We are familiar with debt financing arrangements, as this was how we funded our original purchase of Fisher Funds. That debt was repaid early and in full. The result was, and continues to be, financially rewarding for the Foundation and the community.”
Fisher reported a record net profit after tax of close to $94 million for the 12 months to March 31 this year on revenue of almost $200 million.