The much-delayed deal for the NZ Super Fund and ACC to become major Kiwibank shareholders may now be completed within weeks

Kiwibank might finally - perhaps within weeks - be about to get two new major shareholders, many months after such a proposed deal was first announced.

It was back in April that Kiwibank's owner, the now rather embattled state-owned postal delivery and parcel company, New Zealand Post, announced a deal in principle for the New Zealand Super Fund to buy 25% of Kiwibank and ACC to take a 20% stake. 

The money gained by NZ Post from the sell-down of its interest would go toward a chunky special dividend for the Government and provide cash, which NZ Post says would assist it to "increase its focus on the parcels side of the business".  

On April 6 NZ Post chairman Michael Cullen announced the State Owned Enterprise planned to sell 45% of its subsidiary Kiwibank to the NZ Super Fund and the ACC for $495 million, with the deal to be finalised by June 30. But NZ Post subsequently issued a brief statement on June 24 saying wrapping the deal up was taking longer than expected.

While the parties involved have provided updates along the way, there's been no specific detail given as to why exactly it has been taking so long - although it is a complex deal.

However, today, NZ Post's chief executive Brian Roche said his company had agreed the key commercial terms with the New Zealand Superannuation Fund and the Accident Compensation Corporation (ACC) to become joint owners of Kiwi Group Holdings (KGH) Limited, the parent company of Kiwibank.

The statement gives no indication whether any of the fundamental details of the proposal (such as the 45% shareholding amount for NZ Super and ACC or the amount of cash involved) have been changed.

"Following a period of due diligence, the parties can confirm an application for approval has been lodged with the Reserve Bank," Roche said.

"Transaction documents are now being completed and by the time the Reserve Bank has made a decision, the parties will be in a position to release details to the market. This includes a decision on the future of the New Zealand Post guarantee of Kiwibank’s payment obligations," Roche said.

Neither NZ Super Fund nor ACC were making any comment today ahead of the RBNZ consideration of the deal.

An RBNZ spokesperson said today that consideration of any application for a party to take a stake in a registered bank is done in "a timely manner" but there isn’t a prescribed timeline.

Last month Kiwibank posted a $3 million, or 2.4%, drop in annual net profit after tax for the June year to $124 million from last year's record high $127 million. The bank is paying a $29 million annual dividend, up 32% from $22 million last year, which is equivalent to 23% of net profit after tax.

Kiwibank's upgrade of its core banking system continues, is about halfway through, and means ongoing investment and operating risk over another two to three years.

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4 Comments

Effectively a bailout of NZ Post, and a propping up of KiwiBank. What happens to the Trust deed's that outlines the protection of KB depositors/investors after this deal is made? How exactly do government entities buy out other government entities? All the money is coming from the same pot of taxpayers

This seems like a shifting of the deck chairs on the titanic scenario

typical national behavior when it comes to finance, its a clever way to tap into the assets of the superfund and ACC.
if they are in power another term don't be surprised to see more super fund money flow out to pay for infrastructure or end up back in the government coffers as sale proceeds

Or maybe sharetrader they could use it to fund overseas companies and ignore NZ opportunities completely ?

it should be independent to go after the best companies to get the best returns no matter what or where they are.
this whole transaction has a smell about it, in fact more a stink