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Foreign investment in Aotearoa/New Zealand
Overseas Investment Office - November 2022 Decision
Fisher Funds Buys KiwiSaver Provider Kiwi Wealth
The OIO has approved Fisher Funds Management Limited New Zealand (66.01%), United States of America (23.37%) Various (10.62%) buying 100% of the shares in Kiwi Wealth Management Limited, for $310 million. To quote the OIO: "Fisher Funds Management Limited (the Applicant) is a majority New Zealand-owned specialist investment manager with approximately $14.6 billion funds (as at 31 March 2022) under management on behalf of a wide range of New Zealand clients. The Applicant has been granted consent to acquire 100% of the shares in Kiwi Wealth Management Limited, under the terms and conditions set out in the share sale agreement between the Applicant and Kiwi Group Holdings Limited (KGHL) dated 11 August 2022".
"KGHL is one of the holding companies for the Kiwi Wealth Group, a wealth and investment organisation which manages investment products including the Kiwi Wealth KiwiSaver scheme, Managed Funds, Super Scheme and Private Portfolio Services. The Applicant was selected by KGHL following a competitive bid process. The OIO is satisfied the investor test has been met. The deciding Minister has decided that the investment is not contrary to New Zealand's national interest".
If Fisher Funds is "majority New Zealand owned", why does it require OIO consent? Because it's foreign ownership component is more than the 24.9% stipulated by law. Meaning that Fisher Funds is foreign-owned. Linda Hill explained how it became so in her write up of the August 2018 OIO Decisions. She quotes Fisher Funds' March 2018 Annual Report: "The TSB Community Trust, through its group companies, purchased 51% of the ordinary shares in Fisher Funds Management Ltd, taking its shareholding to 100%. The Group then immediately sold 24.99% of the shares to TA FF HoldCo Ltd, a holding company of TA Associates Management, LP, a global private equity firm with extensive funds management experience".
Linda concluded: "So, just below the level for OIO consent. TA Associates has been around 50 years, now operating out of Boston, Silicon Valley, London, Mumbai and Hongkong. It manages private equity funds in five industry areas: financial services, business services, brand-driven consumer/retail, healthcare and technology".
Government Buys 100% Of Kiwibank
Now the foreign-owned Fisher Funds has made the latest in a series of major purchases, buying Kiwi Wealth from Kiwi Group Holdings, which at the time of sale was co-owned by New Zealand Post, ACC and the NZ Super Fund. The purchase makes Fisher Funds the second largest KiwiSaver provider. At the time of purchase Kiwi Group Holdings owned Kiwibank. That changed very shortly thereafter - only a week or so later, in August 2022, the Government assumed 100% ownership of Kiwibank's parent company for $2.1 billion. That did not affect Fisher Funds' purchase of Kiwi Wealth Management Limited.
"The deal is not without controversy as Kiwi Wealth is a default provider, appointed by the Government to manage more than $450m for nearly 60,000 savers unable to choose funds for themselves, while Fishers lost its default status last year (2021). Fisher Funds also has to quell fears the deal would mean wholesale redundancies among Kiwi Wealth's roughly 200 employees, many based in Wellington... Fisher Funds' majority shareholder is Toi Foundation, formerly TSB Community Trust, which owns TSB Bank... ".
"Another aspect of the deal that has been questioned is the long-term plans of Fisher Funds' American co-owner. While Toi Foundation is a long-term investor, and has owned TSB Bank since 1988, TA Associates operates on shorter investment time frames" (Stuff, 15/8/22, Rob Stock). It was reported in February 2023 that Kiwi Wealth's Chief Executive Officer and five senior executives would all be leaving, after the takeover by Fisher Funds.
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