Japanese financier Shinsei Bank is trying its hand at buying ANZ Bank New Zealand's UDC Finance unit almost two-and-a-half years after China's HNA Group was blocked by the Overseas Investment Office.
The $762 million sale price is $100 million more than HNA offered in January 2017, although UDC's net assets rose 50 per cent between Sept. 30, 2016 and March 31 this year from $424 million to $637 million.
The price-to-book ratio of Shinsei's offer is 1.2 times versus the Chinese firm's 1.6 times. Shinsei's offer is a $125 million premium to UDC's net assets, compared to the $235 million premium three years ago.
The deal is subject to regulatory approval and is expected to be completed this calendar year.
ANZ has been trying to shed New Zealand's biggest finance company for several years, and had a ready buyer in Chinese conglomerate HNA. That deal was scuttled by the OIO, which couldn't work out who the relevant overseas person was from the information provided about ownership and control.
At the time, HNA was under increased scrutiny after a debt-fuelled US$40 billion acquisition spree and it's since been selling assets to meet repay those loans.
Capital freed up
ANZ said the sale will free up $2 billion of funding the bank has provided the finance company. New Zealand chief executive Antonia Watson said Shinsei intends to preserve the existing operations and keep UDC staff.
"The sale will also mean UDC will continue to operate as an independent finance company and enhance competition in the asset finance market," she said in a statement.
Shinsei chief Hideyuki Kudo said the acquisition was in line with the firm's growth strategy and UDC would be a major asset for the group.
"In the covid-19 'new normal', we are confident that UDC, as part of Shinsei Bank Group, will continue to grow and contribute to the development of the New Zealand economy and help people and businesses in New Zealand with their financial needs," he said.
UDC had net loans of $3.44 billion at March 31 and reported a first-half profit of $24.5 million in the six months through March.
ANZ New Zealand said it will report a net loss of $73 million on the sale, after the release of goodwill.