The state-owned New Zealand Post Group has received an indicative offer from the New Zealand Superannuation Fund and the Accident Compensation Corporation (ACC) to purchase 25 per cent and 20 per cent of Kiwi Group Holdings Limited (KGH).
NZ Post Group chair, Sir Michael Cullen, said the indicative offer, which is subject to a number of matters including due diligence, has been priced on a commercial basis, and reflects the Government’s position that Kiwibank must remain in public ownership. The offer is based on valuing KGH at $1.1 billion, which would mean New Zealand Post would receive $495 million.
Cullen, who will stand down as chair to NZ Post at the end of the month, said “no deal has been finalised yet and it will take some weeks for a process to be worked through”. He said, however, they wanted to be “proactive in our disclosure”.
The parties intend to complete the transaction documentation and a sale by June 30.
The New Zealand Superannuation Fund and the ACC are the Crown’s two major investment funds.
KGH is the company that owns Kiwibank and its associated businesses such as Kiwi Wealth Management and Kiwi Insurance.
“New Zealand Post approached the Government and pursued the initiative because it considers that NZ Super Fund and ACC are strong potential shareholders for Kiwibank as a Crown-owned bank. The two investment funds hold assets of over $60 billion between them, while New Zealand Post continues to face headwinds in its core mail business,” said Cullen.
There are various conditions to be met before the proposed transaction can proceed including due diligence, transaction documentation, board approvals and regulatory approval. It is intended that the transaction be completed by the end of New Zealand Post Group’s current financial year.
Sir Michael said the New Zealand Post Board believes that securing an agreement with these two Crown investors – both essential parts of the New Zealand fabric – would be of significant long term benefit to Kiwibank.
“The sovereign-status NZ Super Fund and ACC are proven public sector investors. Their long-term investment horizons, expertise and access to capital would complement New Zealand Post as a shareholder and support the ongoing development of Kiwibank,” he said.
Cullen said the NZ Post has provided approximately $400 million of capital to Kiwibank over its lifetime.
“We believe now is the right time to broaden the bank’s support base within the wider public sector, and this provides the NZ Super Fund and ACC with a rare opportunity to secure a significant minority stake in a large and well-performing unlisted New Zealand business.”
Cullen added the proceeds would allow New Zealand Post to invest in its core parcels, packages and letters business and pay down debt. It is anticipated that a special dividend would also be paid to the Crown.
