Delay on Kiwisaver provider decision

The fate of one of New Zealand's largest KiwiSaver providers remains up in the air after Australia's competition watchdog decided it needed more time to examine the bids for Axa Asia Pacific Holdings.

AXA, which has a significant insurance and investment business in New Zealand, has been in play since late last year when it received a bid from rival financial services player AMP.

But the competition heated when National Australia Bank, owner of the BNZ, also threw its hat in the ring, outdoing AMP's bid.

A ruling from the Australian Competition and Consumer Commission on both bids was due to be made this Wednesday and had been expected to give clearer guidance on who might be the eventual winner.

But, in a statement late last week, the commission said it needed more time and it had asked both bidders for more information.

It will now also make separate recommendations on different dates - on AMP's offer on April 1, and on National Australia Bank's offer by April 22.

In December National Australia Bank, Australia's largest business lender, offered to buy Axa Asia Pacific, the wealth manager that's 54 per cent-owned by France's Axa SA, for A$13.3 billion ($12.2 billion).

That trumped a bid by AMP, Australia's second-largest asset manager.

AMP said on February 18 it was still interested in buying Axa Asia Pacific, calling the regulator's decision "a key factor".

The ACCC has said a purchase by National Australia Bank raises a "higher level of concern" than AMP's proposal.

National Australia Bank has said it expects its proposal to be cleared.

Both suitors plan to keep the Australian and New Zealand businesses of Axa Asia Pacific and sell the units in eight Asian countries to Paris-based insurer Axa SA.

In New Zealand, both deals would have major consequences and create a high level of consolidation in the market.

If National Australia Bank won the bid it would see the BNZ re-united with the investment management business it sold to AXA just four years ago.

Should the deal succeed, BNZ or its parent will become New Zealand's second largest private-sector fund manager with about $7 billion under management.

Axa Asia Pacific's New Zealand arm bought BNZ Investment Management and its $2.4 billion in funds under management in late 2005.

More recently, BNZ returned to funds management in a modest way when NAB acquired 80.1 per cent of Goldman Sachs JBWere's private wealth management business across Australia and New Zealand last year.

Under its plan NAB is offering Axa Asia Pacific shareholders an all-cash offer of A$6.43 a share which values the target at A$13.29 billion. Shareholders could also accept 0.1745 NAB shares and A$1.59 cash per share which, based on NAB's 10-day volume average weighted price of A$28.16, values the target at A$6.50 a share.

The offer by Melbourne-based NAB values Axa Asia Pacific's Australian and New Zealand businesses at A$4.61 billion, compared with the joint AMP-Axa SA offer valuation of A$4.41 billion.

Conversely, if AMP got permission to go ahead the merger would also create a fund management superpower in New Zealand.

Overall, including wholesale and institutional funds under management, AMP's New Zealand investment operation has around $11 billion under management while by the same measure Axa New Zealand has about $6.4 billion under management.

A combination of the two would easily outstrip the NZ Superannuation or "Cullen" Fund, which has about $13.3 billion under management.

In terms of retail funds, AMP has $7.01 billion under management while Axa has $1.28 billion.

While the deal would also cement AMP's position as this country's largest private-sector fund manager, the combined entity would still trail ING and ASB in the KiwiSaver space and Sovereign in the life insurance market.

AXA'S KIWI BUSINESS

* Funds under management: $6.42 billion
* operating earnings for 2009: $35.1 million
* owns financial adviser business Spicers Wealth Management
* has two offers on the table