Tyco tipped to leave New Zealand

By PAUL PANCKHURST

Speculation is red hot that global giant Tyco International - a star of the corporate scandals of the United States - is on the verge of exiting assets in New Zealand.

Finance industry sources believe a deal will be announced this week.

A leader in security and fire protection systems, Tyco is rebuilding its reputation after former chief executive Dennis Kozlowski was charged in 2002 with looting the firm.

In New Zealand, Tyco lists business interests spanning fire protection, security systems, electrical and mechanical services, building products and electronics.

What is not clear: the Tyco interests to be included in the deal.

Certainly, not everything will go.

However, the deal will cover a substantial chunk of what Tyco has here. A finance industry source talked of a transaction larger than $100 million.

The buyer will be Hauraki Private Equity No.2, a fund created by investment bank Goldman Sachs JBWere and sitting on a $74 million war-chest for acquisitions.

By part-funding acquisitions with debt, a fund such as Hauraki can buy big-number assets.

Tyco was outed in Australia in March for discussing selling assets with investment banks. .

Well-known assets in New Zealand include Wormald - the fire protection specialist - and security businesses Armourguard and ADT.

However, Tyco ruled out a sale of Wormald after the publicity in March, describing the business as core and important.

An Auckland specialist in private equity investment said Tyco was a great example of the buying opportunities created by multinationals diving in and out of New Zealand.

Times are busy for New Zealand's burgeoning private equity sector.

Retail broker ABN Amro Craigs and private equity specialist Direct Capital want up to $80 million for the Pohutukawa Private Equity fund.

A Wellington company, Guardian Healthcare Group, is believed on the verge of being sold after expansion funded by an earlier Goldman Sachs private equity fund.

That first fund bought seven former Skellerup companies, including manufacturer Masport, in December 2002 for more than $45 million, largely funded by bank debt.

It later sold one, the engineering equipment distributor Paykel, for $12 million. In May last year, the fund led a consortium that bought hire business Hirepool for $46.4 million.