Partial sale of Kiwibank to NZ Super, ACC completes

A deal which sees the New Zealand Super Fund and Accident Compensation Corp take a partial stake in Kiwibank's holding company has completed, with ACC taking a slightly larger stake than previously suggested and the bank being valued at slightly less than previously thought.

NZ Super has paid $263 million to take a 25% stake in Kiwi Group Holdings, while ACC has paid $231 million for a 22% stake. In September, ACC had agreed to take 20%, and NZ Super 25%.

September's update valued Kiwibank at $1.1 billion, although the deal as completed valued the business at $1.05 billion.

Under the terms of the deal, Kiwibank will reinvest $90 million of the proceeds back into the bank to support future capital requirements and to ensure it is able to grow.

NZ Super chief executive Adrian Orr says it is rare to find investment opportunities of the size and potential of Kiwibank in New Zealand. "As a New Zealand investor with a long-term view, strong financial expertise and available capital, the NZ Super Fund is in an excellent position to help Kiwibank achieve its long-term promise," he said.

ACC board chair Paula Rebstock says Kiwibank "has a strong growth potential that will contribute to the on-going financial sustainability of the ACC scheme."

New Zealand Post has also given notice that it will terminate its guarantee of deposits in Kiwibank from the end of February next year. Any deposits received before this date will be covered, but any made from March 1, 2017, will not.

The deal will also see a special dividend paid to the Crown. This will be determined by the NZ Post board but is expected to be about $200 million.

New Zealand Post chief executive Brian Roche says his company will now "focus more time and energy on completing the transformation of its parcels, logistics and mail business."

Mr Roche says the deal is a good one for all concerned: "It's a fair price that reinforces the investor's confidence in Kiwibank as a good long-term investment, while also reflecting the prescribed limits on their ability to on-sell their stakes and the general market conditions faced by the financial sector."

Neither the NZ Super Fund nor ACC can sell their shares other than to NZ Post for five years. Both new shareholders can increase their shareholdings over time by the reinvestment of dividends, which will dilute NZ Post's holding.

Kiwi Group Holdings posted a net profit of $131 million for the year to June 2016 and has total assets of $19.4 billion.

(BusinessDesk)