Finance company Hanover Group plans to take on the big boys by moving into investment banking and funds management.
New chief executive Andrew Schmidt - formerly an investment banker with Credit Suisse in London and previously Hanover Investments' CEO - said yesterday he would use Hanover's management skills and capital"to create new opportunities, including sophisticated new investment products".
The group, owned by Eric Watson and Mark Hotchin, plans to establish a business with "three pillars" - the existing finance company at the core, a new investment banking and corporate advisory division and a funds management business.
Schmidt said Hanover would soon make "a significant announcement" about funds management.
The company had also set up an investment banking team which would, among other things, look for opportunities "down the line" as the Government invested more in infrastructure, particularly in the main centres.
Schmidt said the company would be interested in pursuing public private partnerships should the Government choose to invest in infrastructure that way.
Hanover had also established a specialist mergers, acquisitions and private equity investment team.
Schmidt said the amount of merger and acquisition activity going on, the weakness in New Zealand's equity markets and Hanover's relationship with Australian private equity investors would help it succeed in investment banking and corporate advice.
Schmidt said the diversification was to give Hanover's 35,000 customers, who have about $1.3 billion invested in its debenture stock, a wider range of products rather than being a reaction to what was happening in the market.
"We're going to bring out a range of investment banking style products and funds management products, probably more in the alternative asset classes, as opposed to just funds management of long equities positions."
The company would take a long-term view on building its funds management business, but was aiming to become a substantial funds manager, particularly in alternative assets, over the next five years.
Hanover is due to report its June year results soon.
Last month, it said it expected a 20 per cent increase in before-tax operating profit to $55 million for the year to June.
