Quadrant exits Australia, New Zealand home equity release assets

The Australian GP took a majority position in SMI in March 2006. It is one of only two remaining assets in Quadrant Private Equity No. 1, a A$265 million ($240 million) vehicle that closed in 2005.

Founded in 2003, SMI has operations in Ireland as well as Australia and New Zealand, helping people over the age of 60 release value thy have built up in their homes without having to move from it or make regular payments.

The management team was originally part of New Zealand life assurance company Sovereign Group, which was acquired by Commonwealth Bank of Australia in 1998. They went independent as Sentinel in 2003, offering financial products and services to those in or approaching retirement. The first home equity release product launched the following year.

The company branched into Australia in 2004 and then expanded into Ireland, Spain, South Africa and Canada between 2005 and 2007. The Spanish and Canadian operations were closed to new business in response to the global financial crisis.

SMI claims to be the leading provider of home equity release loans in New Zealand, with a market share of 80% and the leading non-bank provider in Australia with a 20% share. It continued lending in these markets until late 2012, when the focus turned to servicing existing clients.

Heartland said in a statement that the acquisition, which is due to close on April 1 subject to a number of conditions being satisfied, would give it the product capability to meet the needs of the 65-plus demographic. These are typically people with the majority of their personal wealth tied up in their primary residential dwelling.

There are 635,000 New Zealanders aged 65 and above and their number is expected to reach 1.1 million in 2031. Approximately 82% of these people own their own homes, and 92% of these homes are mortgage free.

Australia's demographics are similar, with the number of people aged 65 and above expected to reach 5.8 million in 2031, up from 3.3 million today. Of this group, 83% own their own homes and 93% of these homes are mortgage free.

The assets being sold, Sentinel New Zealand and Australian Seniors Finance, have an aggregate asset value of approximately NZ$760 million, including mortgage portfolios, operational infrastructure and funding arrangements. The New Zealand business will be integrated into Heartland while the Australian business operates separately. Key staff in both markets will be retained.

Quadrant has been a prolific investor in the aged care sector. Last October the private equity firm completed its exit from New Zealand retirement village operator Summerset via the public market, generating a more than 3.7x return. The same week it acquired a majority stake in Australian aged-care operator Estia Health.

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• Topics
• Exits
• Australasia
• Financials
• Quadrant Private Equity
• Australia
• New Zealand
• Exit
• Trade sale
• Financial Services