A new report “from the coalface” of super fund investing has gone some way to quantifying the cost of shonky investment management, with members potentially losing out on hundreds of thousands of dollars.
Surging equity markets have driven the Future Fund’s return higher, but its prediction that inflation will be stickier than expected has been born out and it “remains conscious of the potential for significant deterioration”.
Control of FNZ up for grabs
Up to five private equity firms are vying for a two-thirds stake in New Zealand-domiciled investment platform business FNZ. FNZ, through a joint venture with UBS Australia, provides backoffice services for several big super fund member-directed investment options, including that of AustralianSuper, which was the first to market here.
The ‘New Model Adviser’ website based in the UK says FNZ senior management would allegedly prefer multiple buyers for the majority shareholding – currently split between private equity manage, General Atlantic and HIG Europe – to avoid a single player dominating the business.
According to the report, FNZ management had already staged “informal discussions with a number of potential investors” in a deal tipped to value the firm at about £2 billion (A$3.8 billion). Given the size of the deal, first floated in July, a joint-venture buyout of FNZ would be the most likely outcome, the article says.
The founder is UK-based New Zealander Adrian Durham who has retained a minority controlling interest through a two-tiered voting share system. In Australia, Nick Sherry, the former Labor Minister for Superannuation, is executive chair.
An FNZ spokesperson said that management had already ruled out an IPO for a business whose “long-term growth strategy is best realised via private ownership”.
“The company decided some time ago to run a private equity-only process, both to provide an exit for its two current private equity investors; and reflecting the company’s substantial global growth opportunities,” the FNZ spokesman said.
Emerging out of stock broking firm First NZ Capital in 2004, FNZ now has almost $500 billion in assets under administration, including about $50 billion sourced from its recent purchase of German investment platform ‘ebase’ from Commerzbank. The UK report says the ebase deal has held up the FNZ sales process, now expected to be signed off by the end of March next year.
Since landing cornerstone UK client, Standard Life, in 2005, FNZ has considerably expanded its client list – especially in Europe – to include big name financial institutions such as Zurich, Aviva, Barclays, HSBC and Santander.
Back on its home turf, FNZ has about $15 billion under management for a range of NZ institutions and financial advisory groups, including close to $2 billion with adviser services firm, Consilium.
Last December the Edinburgh-headquartered firm also branched out from its core administration business to take a stake in start-up UK robo-advice provider, Advicefront. In June this year, FNZ tipped in a further £1 million to Advicefront, doubling its investment in the business.
At the time, Adrian Durham, said: “We’re really excited about the potential for Advicefront’s technology to help ambitious financial services firms serve more clients, in a cost-effective way, while retaining the all-important human touch that customers want.”
– David Chaplin, Investment News NZ
