Morgan Stanley draws up shortlist of bidders for ANZ's UDC

UDC is active in financing heavy machinery in the primary sector. Photo / NZ Herald.

The sale of ANZ's New Zealand finance company arm, UDC Finance, is down to a shortlist of bidders, the Australian Financial Review reports.

Citing unamed sources, the paper said prospective acquirers who tabled an indicative offer 10 days ago for UDC Finance were notifed on Friday by Morgan Stanley if they were successful.

The second stage of the sale process would get under way in January, it said.

Spokespeople for the bank in New Zealand were not immediately available for comment.

The bank has said in the past said it does not comment on speculation.

ANZ came close to selling UDC - which specialises in providing finance for the transport, forestry, agriculture and manufacturing industries - to China's HNA for $660 million in 2017 before the Overseas Investment Office rejected its application.

UDC this month posted a record net profit after-tax of $69.7m for the financial year to 30 September 2019 - a 7 per cent increase on the 2018 financial year.

A key contributor to the result was strong lending growth, up 5.5 per cent to $3.4 billion.

This growth was led by commercial lending which grew by $100m, up 8 per cent, and motor vehicle lending which increased $91m, up six per cent.

"UDC has delivered another strong result, reflecting growth in our loan portfolio across the wide range of industries we work with, as well as a focus on credit quality and careful cost management," UDC chief executive Wayne Percival said at the time.

The credit impairment charge of $13.2m remained low.

However, this has increased $2.3m due to growth in the motor vehicle lending portfolio, as well as changes flowing from the implementation of applicable international accounting standards, he said.

UDC wound up its debenture book and all customer investments were repaid or converted to an equivalent ANZ investment.

The level of funding support provided by ANZ had increased accordingly, with the limit on the facility increased to $3.1 billion.

The finance sector faces some big changes in 2020 with a number of legislative changes, including to the Credit Contracts and Consumer Finance Act and higher capital requirements for the big banks. ANZ bought UDC in 1980.