David Chaplin 's Opinion

A personal finance columnist for the NZ Herald

Inside Money: Fisher tipped as $50m Tower-bidder while banks circle

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Carmel Fisher. Photo / Doug Sherring
Carmel Fisher. Photo / Doug Sherring

Potential new owners have been scouring the books of Tower's investment business over recent weeks, according to several well-placed industry sources.

It is understood Fisher Funds has already lobbed in a $50 million bid, although it's not clear if the offer extends only to the jewel-in-the-crown KiwiSaver scheme or to the whole Tower funds management business.

As well as its KiwiSaver scheme, which boasts over 100,000 members and more than $800 million under management, Tower manages money on behalf of external institutional clients and the group's own insurance arm. In its annual report for the year to September 2011, Tower claimed a total funds under management (FUM) of about $4 billion.

While the wholesale money may be of interest to some bidders, the real appetite would be for Tower's KiwiSaver scheme, which currently features government-mandated default flows in addition to the generally-acknowledged 'sticky' nature of retail clients.

Fisher, of course, has been the most acquisitive of KiwiSaver providers, lapping up the First NZ Capital and Huljich schemes in quick succession while securing a distribution deal that saw it inherit most of the members from the wound-up NZ Credit Union scheme. As a point of comparison, Fisher paid about $20 million for Huljich, eventually transferring almost 90,000 members and $191 million across.

With more than four-times the FUM of Huljich, the Tower scheme presents a bigger challenge and this time round Fisher is probably facing more fierce competition.

It has been widely-speculated including by me that the natural buyer for Tower's scheme would be BNZ, which as we all know is the only major bank yet to launch its own KiwiSaver product.

However, it is believed other Australian-owned banks are, or were, leading the Tower hunt.

Macquarie Bank, which owns the tiny Brook KiwiSaver scheme, has allegedly been kicking Tower's tyres although it may already have withdrawn from the fray.

Surprisingly, the Commonwealth Bank-owned ASB the country's single-biggest KiwiSaver provider and fellow member of the default club is also understood to be in the market for Tower.

Naturally, all this speculation may come to nothing (as it has many times previously) but Tower is expected to announce a decision either way by February next year.

David Chaplin

A personal finance columnist for the NZ Herald

David is a freelance journalist who has covered the financial services business on both sides of the Tasman for over 15 years. David has edited magazines and websites for the financial advice, investment and superannuation industries. Today, he contributes to various publications in Australia as well as his bi-weekly blog for the NZ Herald under the 'Inside Money' banner.

Read more by David Chaplin

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