KEY POINTS:
Property financier Strategic Finance says potential buyers with strong capital backing have started talks about buying New Zealand's fourth largest finance company.
The company is also going through an intensive review of its loan book as it approaches the end of the financial year.
More news on the talks about a change of ownership are likely within three to four weeks, Strategic chief executive Kerry Finnigan told interest.co.nz.
Strategic Finance is owned by listed Australian investment fund Allco HIT and owes more than $500 million to over 20,000 investors.
It was founded in 1999 and run by former All Black captain Jock Hobbs before the business was sold to Allco. Hobbs, who is also the chairman of the New Zealand Rugby Football Union, remains an executive director of Strategic.
"A number of people are looking at the business," Finnigan said, adding that one option was some sort of management buyout with a well-funded backer. "Whoever wants to buy us would need to have access to funding."
Strategic Finance's ownership has been up in the air since Allco HIT's controlling shareholder, the investment bank and funds manager Allco Finance Group, announced a major strategic review this year amid discussions about its own bank funding lines in the wake of the global credit crunch.
Finnigan acknowledged that the uncertainty about the strength of Allco had affected confidence in Strategic Finance.
"It does affect us. The indications are that confidence is impacted by whatever happens at the parent," Finnigan said, adding that Strategic needed a strong shareholder with the capacity to contribute capital backing when necessary.
Allco bought 50 per cent of Strategic in May 2006 and bought the following 50 per cent last year for $225 million in a deal that saw ownership move to Allco HIT, the listed investment trust. Allco is conducting a strategic review of all its assets, including Allco HIT, and has flagged it plans to sell financial services businesses, although Allco HIT has not formally put Strategic up for sale, Finnigan said.
"We are aware of a number of parties who have expressed an interest in acquiring Strategic, including the management," Finnigan said. "Discussions are at the very early stages, but we would expect to provide some clarity on this in the next 3-4 weeks."
