NZX pays $25m for ASB Master Trust management rights

The NZX ticker on the building downtown Supplied 19 OCT 2015 HBG 08Dec15 - COMPETITIVE: Lower than hoped customer numbers aren't helping, but Contact's cash flows are still good, an adviser says.

NZX said it would pay $25 million for the management rights of the ASB Superannuation Master Trust, which includes more than $1.8 billion in retirement savings from more than 17,500 members across more than 100 employer groups.

The acquisition, through the NZX's unit Smartshares, is intended to be funded from cash on hand and new debt facilities.

Acquisition costs relating to the transaction are about $1.3m and will be reported in the 2021 financial year.

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The NZX board has confirmed the company is maintaining its full-year 2021 operating earnings guidance to be in the range of $32m to $35.5m.

Chief executive Mark Peterson said the acquisition would deliver a step-change in scale for NZX's passive funds management business, Smartshares, and is aligned with the group's strategy to capture complementary opportunities across its Funds Management, Wealth Technologies and Markets businesses.

ASB executive general manager private banking, wealth and insurance, Adam Boyd, said the divestment made good strategic sense, enabling the bank to focus on further developing the ASB KiwiSaver Scheme, Investment Funds and Portfolio Series core wealth offerings.

Earlier this year, the bank partnered with the world's largest investment manager BlackRock.

"By focusing on these core offerings, we can continue to invest in enhanced customer experiences and performance," Boyd said in a statement.

The transition of management rights is expected to occur in either late 2021 or early 2022 with a transition of services over the following two-year period.

Peterson said the acquisition builds on strong recent organic growth in NZX's Funds management business.

"This will help us achieve the scale necessary to maintain our market-leading position in low-cost passive investment solutions in New Zealand," he said.

Smartshares' Funds Under Management (FUM) went up by about 30 per cent to $5.92b over the past year.

The acquisition is expected to contribute between $4m and $4.3m annually to NZX's operating earnings.

NZX said the transaction is expected to complete in late 2021 or early 2022 and the financial impact will be included in NZX's full-year 2022 operating earnings guidance to be released alongside the full-year 2021 financial results in February.

The company signalled in August that it was investigating possible acquisition opportunities.

Peterson said the acquisition will drive scale in NZX's Passive funds management business and is aligned with NZX Group's broader strategy.