The more than $1.1 billion Tauranga Energy Consumer Trust (TECT) fund is set to appoint a new asset consultant ahead of a major restructure at the group.
Wayne Werder, TECT general manager, said the fund was in the process of replacing current consultant, the Ed Schuck-led Fidato Advisory, as part of a mutual long-agreed transition.
“We’ve been planning to do this for a while,” Werder said.
He said the looming asset consultant change was unrelated to the TECT restructure proposal floated earlier this year as Trustpower – the fund’s main investment – revealed plans to offload its retail business. In June Trustpower announced a conditional deal to sell its gas, telecommunications, and retail electricity supply business to Mercury NZ for just over $440 million pending several conditions including a revamp of TECT.
Fidato was appointed to establish the TECT diversified portfolio in 2015 after the Tauranga energy group sold down shares in Trustpower netting about $155 million to invest. In 2018, the TECT diversified portfolio received a further boost when Trustpower sold its share in Tilt Renewables.
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. The sale of the Trustpower retail business (TECT owns about a quarter of the energy business) should see further transfers to the diversified portfolio.
However, the TECT rebuild, approved in principal by the trustees in April, requires High Court approval with a hearing date set down for November 15 this year.
Under the plan TECT would split into two vehicles with the original (but renamed) entity to fund Trustpower consumer annual rebates for 30 years while a newly established community trust would support charitable giving in the region for an indefinite period.
The proposal would limit the 30-year run of $500 annual rebates to all Trustpower clients in the region as at January 28, 2021.
TECT was set up in 1993 following reforms of the NZ electricity market with a mandate to distribute its share of Trustpower income to eligible consumers as rebates while also allocating a portion (about 30 per cent) to community grants.
On its website, TECT says: “The current proposal has been selected by the Trustees as the best option because it balances the desires of current customers to continue to receive their rebates, takes into account the broader community concerns and in effect continues the current structure on for another generation.”
Werder said, if approved, the restructure would likely require some changes to the underlying investment strategies.
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.