Combining Fisher Funds and Kiwi Wealth would make it the third largest player in the market. Photo / Dean Purcell.
The sale of Kiwi Wealth appears to be virtually a done deal, with just the final details to be ironed out with preferred bidder TA Associates/Fisher Funds.
Stock Takes understands an announcement is likely to be made next week confirming the sale, but conditional on Overseas Investment Office approval.
That approval is required because of the involvement of TA Associates - a US private equity firm.
Fisher Funds is 33.99 per cent owned by TA Associates, while its majority shareholder is the Toi Foundation - formerly known as the TSB Community Trust - which also owns TSB Bank.
Speculation has focused on the sale being worth somewhere between $300 million and $400m but Stock Takes understands it is more likely to be between the high $200 millions and mid-$300 millions.
Market conditions of late are expected to have been a drag on the price.
Even after the sale is done, a referral deal is likely to remain in place between Kiwibank and Kiwi Wealth. That means Kiwibank customers are pointed towards the Kiwi Wealth KiwiSaver scheme, with Kiwibank collecting a referral fee from the new owner.
The banks' distribution reach has proven to be a major advantage in building their market share in KiwiSaver.
ANZ - the country's largest bank - is also the largest KiwiSaver provider, while ASB and Westpac are currently the second- and third-largest players.
Distribution tie-ups have been common in many of the major deals in recent years in which banks have sold their wealth businesses.
Kiwi Wealth is part of Kiwi Group Holdings, which is owned by NZ Post, ACC and the NZ Super Fund. It is the fifth-largest KiwiSaver provider with about $6.8 billion in funds under management.
Combining Kiwi Wealth and Fisher Funds would create the third-largest player behind ANZ and ASB.
But questions remain about why Kiwi Group Holdings would want to sell Kiwi Wealth given its strong market position and growth potential.
One market player likened the decision to a similar one made by listed insurer Tower.
"When you look back over the years, Tower sold their KiwiSaver wealth business and concentrated on insurance - that was a terrible decision. The KiwiSaver wealth business has gone on to be very valuable and the insurance business has gone nowhere."
He said Kiwi Group Holdings should be selling Kiwibank instead of Kiwi Wealth.
"One business throws off cash, the other absorbs massive amounts of cash. One business is very highly valued, the other is very lowly valued - I just think it is a slightly nutty decision for shareholders to make.
"Why wouldn't you go the other way and sell the bank and keep the wealth?"
Asked why it was selling a high-growth business like Kiwi Wealth and keeping the low-growth, capital-intensive Kiwibank, a spokeswoman for Kiwi Group Holdings said: "As a prudent manager of a portfolio of assets, we assess the performance and strategic fit of our assets from time to time, with a view to ensuring we and the individual assets themselves are best positioned for the future.
"Kiwibank is a strongly performing bank and remains an attractive core asset for KGH."
She would not be drawn on how the proceeds of a sale would be used. "Any use of sale proceeds will be confirmed by our shareholders once the process is complete."
S&P Global Ratings says Australian and New Zealand airports are plotting a cautious path to recovery.
Barring any restrictions, Pacific airports should see domestic traffic fully recover to pre-pandemic levels by 2024, the ratings agency says.
International traffic should follow a year later.
"There remains a residual risk of fragile recovery," S&P Global Ratings credit analyst Parvathy Iyer said in a report.
"This includes economic uncertainties, geopolitical factors, the inflationary effect on discretionary spending, still-high airfares, and consumer anxiety around long-haul travel."
Australian and New Zealand airports are already seeing a strong rebound on the domestic side, at 70 to 90 per cent of pre-pandemic levels from April to June 2022.
International travel is showing positive momentum at about 30-50 per cent of pre-pandemic levels over the same period.
Domestic and international airlines are responding by adding capacity to match demand.
This should see traffic build over the next 12 months, S&P said.
"Still, we expect airports to remain cautious and flexible in the timing of their capital expenditure and shareholder returns at least over the next year or two," it said.
"Airlines are also unlikely to agree to large aeronautical-related investments until they see a firm rebound in traffic."
The agency expects domestic traffic to rebound by mid-2024, and international by late 2025.
Auckland International Airport is due to report its result for the June year on August 18.
It has been a week of new relationships, with Forsyth Barr announcing an alliance with Australian investment bank Barrenjoey and Jarden set to work with online trading platform Hatch.
The ForBarr/Barrenjoey tie-up will mean they provide reciprocal access to institutional equities research and execution, corporate advisory and capital markets services.
Barrenjoey is a relatively new investment bank that was formed in September 2020 by a group of former high-profile UBS bankers with backing from Hamish Douglas' Magellan and British investment bank Barclays.
The alliance is said to have come after the two companies worked together on the initial public offer of Ventia Services, which dual-listed on the NZX and ASX last November.
Barrenjoey is said to have been eyeing the New Zealand market for some time and has already won several big mandates here, including selling Vodafone's telecommunications towers for Infratil and Brookfield and potentially floating Carter Holt Harvey.
For Forsyth Barr, it will offer its clients more information on the Australian market which has been a stronger performer than the NZX in the past year, as well as smoothing the process for Kiwi companies that want to dual-list.
Forsyth Barr managing director Neil Paviour-Smith said the senior teams of the two companies had built strong working relationships.
"Barrenjoey and Forsyth Barr have a complementary deep commitment to their local markets, and we look forward to the benefits this can offer our respective clients.
"Alongside aligning on execution and corporate advisory activities, clients of both firms will benefit from each other's equity research product."
Barrenjoey founding partner and chief executive Brian Benari said Forsyth Barr operated
a successful and well-established institutional equities and corporate advisory business
with very strong connections in New Zealand markets.
"Their complementary values and staff ownership strongly aligns with our own."
Jarden's tie-up with wealth management platform FNZ will bring together Jarden Direct and Hatch under a new joint venture company in which Jarden will be a 25 per cent shareholder and FNZ will own 75 per cent.
The deal makes sense as Hatch offers access to the US markets but had always intended to expand to offer New Zealand shares to its customers.
For Jarden, it will provide exposure to a new range of retail clients and technology which already has strong brand recognition with the public.
Jarden chief executive James Lee said the new platform would enhance the investing services available to Hatch and Jarden Direct customers, offering the ability to invest in shares and bonds listed on New Zealand, Australia, US and UK markets.
"This is alongside multi-currency wallets and unlisted securities, incorporating premium investing tools. It will build upon shared beliefs in the importance of quality information alongside a premium, comprehensive service."
FNZ chief executive James McDonnell said it was excited to partner with Jarden to further develop a digital-first, DIY investment platform centred on the needs of investors in New Zealand.
"This partnership marks the latest milestone in our ongoing mission of opening up wealth, empowering all New Zealanders to create wealth through personal investment, aligned with things they care about the most, on their own terms."
The companies said it would be business as usual for Hatch and Jarden Direct customers while the new platform was developed.
Infratil rose nearly 4% during an announcement-light day on the bourse.