NZ Super joins $172m investment in Kiwibank
New Zealand Superannuation Fund (NZ Super) has participated in a NZ$247 million ($172 million) investment in Kiwibank, a banking and finance services provider controlled by New Zealand Post.
New Zealand Post and the government’s Accident Compensation Corporation (ACC) also took part in the deal, structured as a common equity subscription. According to a statement, contributions were proportionate to existing shareholdings, which stood at 53%, 25% and 22% for NZ Post, NZ Super and ACC, respectively, as of October last year.
The investment follows a preliminary Reserve Bank of New Zealand decision that deemed a recent A$175 million ($131 million) bond issue by the bank as failing to comply with government capital adequacy requirements. Kiwibank responded by saying the issue related to a “technical interpretation” and cancelling the bond issue.
Since launching in 2002, Kiwibank claims to have serviced more than 800,000 customers via some 250 post office shop locations and a nationwide network of ATMs. Services cover personal and business banking as well as international transactions and foreign currency accounts. Revenue was steady during the 2016 financial year at NZ$477 million, while pre-tax profit fell 6% to NZ$165 million.
NZ Super and ACC initially invested the bank in April last year, committing a combined NZ$494 million for 25%, and 22% positions, respectively. As part of the transaction NZ Post agreed to re-invest NZ$90 million of its proceeds back into Kiwibank.
Recent activity by NZ Super includes a commitment to evenly split NZ$260 million between domestic PE funds managed by Direct Capital, Movac and Pioneer Capital. This followed the sale of LP positions in three US-based funds, including Hellman & Friedman VII, JMI Equity Fund VII and HIG Bayside Loan Opportunities Fund II.
As of February, 5% of the LP’s portfolio exposure was in private equity. In geographic terms, North America is its preferred investment destination with 42% of the asset portfolio by value. Asia Pacific investments by comparison represent 35%.
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