KEY POINTS:
Australian investment firm Allco Finance Group is poised to take full control of New Zealand property finance specialist Strategic Investment Group after securing a half-share early last year.
Subject to shareholder and Overseas Investment Office approval, the deal will settle this month.
ASX-listed Allco, which manages assets of more than A$7.6 billion and is part of a consortium buying Qantas Airways, is buying the parent company of Strategic Finance which is to issue its interim results next week.
Strategic chief executive Kerry Finnigan and Allco external relations director Christine Bowen said the agreement would make Strategic - a private company - part of the ASX-listed group.
Finnigan said yesterday executives at his Auckland office had signed contracts committing themselves to Strategic under the new ownership for at least the next three years, and little would change.
"The advantage is that we now have the backing and opportunities provided by being part of the Allco Group," he said. Neither party put a price on the deal.
Strategic's annual result in the year to June 30 last year showed it had assets of almost $500 million.
Last September, Strategic Finance reported a 10.5 per cent drop in net profit to $22.8 million for the year to June.
The previous year's result was boosted by advisory fee income from two large transactions, the company said.
Total assets rose 26 per cent to $498.7 million, and total liabilities which were largely depositors' funds rose by 29.5 per cent to $439.1 million.
Shareholders' funds rose 4 per cent to $59.7 million.
Allco is paying a combination of cash and shares, and Finnigan said this would mean Strategic's owners would retain a strong equity interest in the success of the business.
"Strategic will continue to operate as a separate entity, fully committed to our staff, investors and broker network," he said.
Strategic's founders include secretive millionaires Paul Bublitz of Auckland and Brian Fitzgerald of Wellington. Companies office records show Strategic Investment Group's directors are Australians John Drabble, Nicholas Goh and Timothy Rich and New Zealanders Jock Hobbs, Graham Jackson and Marc Lindale.
Hobbs, a former All Black captain, was Strategic's chief executive until Finnigan took over two years ago.
Last March, Strategic said its six directors had sold a 50 per cent share to Allco. David Coe, Allco's chairman, said his group made the investment because it recognised the potential for growth in New Zealand.
Coe said then that co-ownership would diversify the funding base and develop investment opportunities.
This was expected to enhance balance sheet efficiency and increase overall earnings.
Allco
* Australian investment bank.
* Listed in the top 100 on the ASX.
* Specialises in aviation, shipping, rail and property.
* Manages A$7.6 billion in listed and unlisted funds.
Strategic Investment Group
* Privately owned New Zealand financier.
* Started in 1999 and specialises in property.
* Raises money through debenture issues.
* Specialises in mezzanine finance.
