Wrap platform FNZ has sold for close to $34 million in a management buyout/private equity deal revealed yesterday.
Under the arrangement, FNZ management has partnered with private equity HIG Europe to take over ownership of the platform business, which straddles both the New Zealand and UK markets.
Figures from the New Zealand Companies Office showed FNZ shareholders received £18.49 per share which, after some adjustments, equates to a total of approximately £13 million or $34 million – exceeding expectations in a down market.
It is understood that FNZ management would retain a controlling interest in the restructured business.
According to Adrian Durham, FNZ chief, the platform currently administers about $13 billion across the two countries with just over $4 billion held in New Zealand and the remaining $9 billion in the rapidly expanding UK wrap market.
Typically, platforms such as FNZ receive about 20-25 basis points for administration services.
In a statement announcing the buyout, Matthias Allgaier, HIG head, said FNZ had “an excellent record of delivery... with profitable turnover of £20 million”.
“We believe that FNZ has the best technology in its class and we are excited to provide the capital to further accelerate FNZ’s growth both in the UK and internationally,” Allgaier said.
As well as netting close to $100 million in a deal to create an investment platform for financial services giant Standard Life in 2005, FNZ has since signed similar wrap development agreements with AXA UK and JP Morgan.
“We have a very active pipeline of pending deals of a similar size in the UK, a number of which we expect to close in 2009,” Durham said.
While growth in the wrap business, first launched within First New Zealand Capital before being spun off into a separate entity about two years ago, has hinged on the UK market, Durham said New Zealand would continue to be a focus for the firm.
“We believe there is still room for significant growth in NZ arising from both growth in funds from our largely institutional customer base and additional institutional customers not currently using the FNZ platform,” Durham said.