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'A range of opportunities' being explored for Kiwi Wealth; Goldman Sachs advising

Personal Finance / news
'A range of opportunities' being explored for Kiwi Wealth; Goldman Sachs advising

Kiwi Group Holdings Limited (KGHL), owner of Kiwibank, has officially put the 'for sale' signs on its Kiwi Wealth business.

KGHL has appointed Goldman Sachs to "lead the process of assessing possible options for the sale of Kiwi Wealth".

This comes about two months after strong rumours Kiwi Wealth would be sold.

And it also comes after the Government indicated it was "currently considering the best ways for the Crown to express its ownership interest", in the KGHL parent company.

Kiwi Group Holdings is owned by New Zealand Post (which holds a 53% stake), the New Zealand Superannuation Fund (25%) and the Accident Compensation Corporation (22%). 

A statement from KGHL on Tuesday said it was "exploring a range of opportunities" to enable subsidiary company Kiwi Wealth Management Limited (Kiwi Wealth) "to continue to grow and unlock value for its current owners, including the potential sale of the asset".

Kiwi Wealth is described by KGHL as providing KiwiSaver and wealth management services "to help New Zealanders realise their goals for the future". Then known as Gareth Morgan Investments, Kiwi Wealth was acquired in 2012 for $57.225 million, adding to KGHL's suite of wholly owned subsidiaries, which includes Kiwibank.

A KiwiSaver default provider, Kiwi Wealth had more than $7 billion under management at December 31 according to Morningstar.

KGHL Chair, Dame Paula Rebstock says Kiwi Wealth has performed strongly over recent years and KGHL values its contribution to the Group, but the time is right to test market interest to best position both Kiwi Wealth and KGHL for the future. 

“While there is no predetermined outcome to this process and the status quo remains an option, it is prudent to consider potential buyer interest especially from those that are committed to building the scale and specialisation in investment management services that ultimately benefits customers,” Rebstock said.  

In the meantime, Kiwi Wealth chief executive Rhiannon McKinnon, said it was business-as-usual at Kiwi Wealth "and our focus will continue to be on providing competitive KiwiSaver and wealth management services, and delivering results for our customers".

The current ownership structure of KGHL has been in place since 2016 after ACC and the Super Fund bought in back in 2016. Prior to that it was wholly owned by NZ Post.

A statement from Finance Minister Grant Robertson last month said that since 31 October 2021, any shares offered by any Kiwi Group Holdings shareholder and not taken up by other existing Kiwi Group Holdings shareholders "would be available for the Crown to purchase directly".

"Ministers and officials are currently considering the best ways for the Crown to express its ownership interest."

The 2016 deal saw the NZ Super Fund invest $263 million for a 25% stake, and ACC $231 million for a 22% stake, valuing Kiwi Group Holdings at $1.050 billion. NZ Post retained 53%.

At the time it was announced that ACC and the NZ Super Fund couldn't sell their Kiwibank stakes to anyone other than existing shareholders for five years. After that, if they want to sell, the Government has the option to buy the shares back before they are offered to any third parties. 

Kiwi Group Holdings sold life insurer Kiwi Insurance Ltd to NIB NZ Holdings for $45 million in November. And in January The Australian Financial Review reported Kiwi Group Holdings had hired Goldman Sachs to test the market for Kiwi Wealth following unsolicited approaches for the fund management business that's a KiwiSaver default fund provider.

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Another kiwi bank might end up in Aussie hands.