14 Nov 2013

Grosvenor bids to take full ownership of Tranzact

7:44 am on 14 November 2013

Grosvenor Financial Services is bidding to take full ownership of its Australian-listed business and wants to concentrate on the KiwiSaver market.

The company is looking to buy the remaining 40% of ASX-listed Tranzact for 12 Australian cents a share, which will cost it about $A5.5 million.

Tranzact owns two companies, the Australian master trust business and the Camelot financial advisory business.

Grosvenor managing director Allan Yeo says the move is primarily to save money and the Tranzact businesses have become too small to justify staying on as an Australian listed company.

Mr Yeo says it's helped Grosvenor to focus more on New Zealand and he hopes Grosvenor will be in the position of owning all of Tranzact early in the new year.

He says the Camelot business will continue as usual, while Grosvenor will continue to look to grow the Australian master trust business, either by merger or acquisition.

Grosvenor has about 100,000 KiwiSaver members and $650 million of funds under management in its KiwiSaver scheme, largely thanks to its purchase of Fidelity Life's KiwiSaver business earlier this year.

Under that deal Fidelity Life took a minority shareholding in Grosvenor of between 10% and 20%, making it Grosvenor's second largest shareholder behind the managing director Allan Yeo.

Mr Yeo says Grosvenor would like to make more deals like the Fidelity one and to have further discussions with other players either by acquiring them or working more closely together.

He says the market, which is dominated by foreign owned banks and financial institutions, needs to rationalise further.

Mr Yeo says KiwiSaver is a mass market product and numbers are important. He says players that don't have sufficient numbers are unlikely to survive in the future.

"We've managed to get ourselves into a position where our long-term survival is not in doubt, we have still got a significant spare capacity to grow and you know we can extract further significant synergies both for ourselves and for the benefit of our members."

Mr Yeo says Grosvenor intends to apply to be a default KiwiSaver scheme.