Inside Money: NZs oldest trustee company tipped for sale, again

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New Zealand's trustee market is poised for a further round of consolidation with Trustees Executors (TEA) rumoured to be on the block.

According to several industry sources, TEA, currently owned by US-based investment firm, Sterling Grace, has been shopped around over the last six months to a number of interested parties.

This April Guardian Trust, which along with TEA and the government-owned Public Trust constitute New Zealand's three largest corporate trustee firms, was sold by its Australian owner to Complectus, a consortium comprised of Bath Street Capital (the owner of Perpetual Trust NZ) and a Milford Asset Management investment fund, for about $70 million.

Bath Street Capital, an investment vehicle headed by Perpetual NZ chair, Andrew Barnes, bought out Milford's 50 per cent share of Complectus in August.

Barnes says he would "always have a look" at other opportunities in the NZ trustee market, which he says is due for more consolidation and modernisation.

"Of course, we'd be interested in looking at TEA," he says. Although, Barnes says he hasn't yet sighted any formal TEA sales documentation.

Established in 1881 as the country's first trustee company, TEA "oversees the administration and supervision of client funds totalling in excess of $80bn", the group's website says.

The company has been through several changes of ownership over the years, including a long stint as a listed firm. TEA was bought in the 1970s by the National Insurance Company, which morphed into Tower in the 1980s. Sterling Grace purchased Tower Trust, as it was then-known, in 2003, reverting the company back to its original name.

TEA operates three units: private wealth, which offers personal investment and estate-planning services; a corporate trust arm, and; a third-party investment administration business.

Its corporate trust business includes KiwiSaver trustee duties for eight schemes, including Fisher Funds, Mercer and Milford. However, TEA's list of client KiwiSaver and super schemes includes several closed, or about to close, funds such as Brook, the ANZ Retirement Plan and the Kiwibank KiwiSaver scheme (which is due to partly merge into the bank's Kiwi Wealth KiwiSaver).

TEA has also just lost its second-largest investment administration client, after Fisher Funds, with the $3 billion plus Milford set to move most of its fund back-office functions to Auckland-based supplier MMC . The Milford KiwiSaver scheme prospectus says it will transition the investment admin to MMC from TEA from November 1 this year.

TEA was not available for comment prior to press-time.