Major holder emerges for Heartland

As a result of Heartland's underwriting arrangements, Impact Capital has ended up with the biggest single shareholding. Photo / Supplied

Backing of PGW deal gives Sth Is underwriter biggest single stakeholding in finance group

Marlborough-based Impact Capital has emerged as Heartland New Zealand's single biggest shareholder after supporting the South Island-based financial services group's $100 million purchase of PGG Wrightson Finance this year.

Heartland - which is the result of a merger between Pyne Gould Corp's Marac Finance, CBS Canterbury and Southern Cross Building Society - listed on February 1 and announced plans to raise $55 million for its purchase of PGG Wrightson Finance in June.

As a result of Heartland's underwriting arrangements, Impact Capital has ended up with the biggest single shareholding (7.9 per cent). Interests associated with Pyne Gould director George Kerr have 7.2 per cent, Accident Compensation has 7 per cent, Pyne Gould has 6 per cent and PGG Wrightson has 3.4 per cent.

Heartland's focus is on small- to medium-sized businesses and farmers, providing business loans, residential mortgages and seasonal farm finance. The company has plans to become a fully registered New Zealand bank.

"We have got five good, committed shareholders which we are pleased about," said Heartland chief executive Jeff Greenslade.

Not much is known about Impact Capital but the company's website says it seeks out equity opportunities in established businesses that require an injection of capital.

Impact Capital was founded by Greg Tomlinson after the partial selldown of his retirement village investments. The website says Tomlinson was one of the original pioneers of the mussel industry in Marlborough and more recently has partially sold his interests in retirement village operator Qualcare to establish Impact Capital. He continues to be managing director of Qualcare.

In June, Heartland announced it would acquire PGG Wrightson Finance and form a strategic alliance with PGG Wrightson.

In order to maintain acceptable levels of capitalisation after the acquisition, Heartland aimed to raise a minimum of $55 million of fresh capital through a combination of private placements and a share purchase plan (SPP). This was later raised to $58 million.

Placements for $20 million at 75 cents per share were agreed to with PGW ($10 million) to underpin the strategic alliance with Heartland and a further $10 million with Pyne Gould. In July, the company announced plans to raise $35 million through a SPP.

Impact Capital had entered into a formal underwriting agreement with Heartland to underwrite up to $25 million of the total sought under the SPP, at the 55.2c per share SPP price - which was based on the prevailing market price - or $0.65 per share, whichever was the higher.

As it turned out, the share purchase plan raised just $12.1 million (at 55.2c a share), which meant the underwriters took up the shortfall at the agreed 65c a share.

Heartland said Impact Capital was a long-term value investor.

The stock closed on Friday at 57c, up 1c.