UBS is buying Credit Suisse in a US$2b deal after a string of US bank failures and in an extended interview the NZ Stock Exchange CEO discusses a lack of IPOs and what sectors the exchange wants more of.
Video / NZ Herald
Swiss bank Credit Suisse sent shockwaves around the world this week when the once-formidable banking institution was brutally subsumed into rival UBS.
As one of the world’s leading financial services providers, Credit Suisse was known for its strict bank-client confidentiality and banking secrecy.
For some of its 167years, Credit Suisse was a big player in New Zealand, with its fingerprints on many of this country’s largest corporate deals.
It came to prominence here in 1990 under its former moniker, Credit Suisse First Boston (CSFB), when it bought Jarden & Co’s New Zealand sharebroking business and Sydney-based advisory business.
Jarden & Co was founded by former All Black Ron Jarden in 1961 and became known as Jarden Morgan.
The firm would become an icon of the local investment community with illustrious names such as Chris Liddell, Lloyd Morrison, Brian Gaynor, Rob Cameron and Suzanne Snively walking its halls.
With CSFB on board, Jarden Morgan worked with the New Zealand Government on the privatisation of Telecom and Air New Zealand, among several other deals in the early nineties.
In mid-1995, local management bought 75 per cent of the firm before CSFB moved back to full ownership in 1998.
Credit Suisse was involved in some of New Zealand's biggest deals, including SkyCity capital raises and helping put together Precinct Properties, developer of Commercial Bay. Photo / Jason Oxenham
Then, in May 2002, CSFB decided to exit this country and local staff bought the New Zealand business operations, forming a new firm called First NZ Capital.
Chaired by Bill Trotter and with Scott St John at the helm, the firm would become the dominant player in the local market.
CSFB’sexit was part of a widespread scaling back of New Zealand operations by a number of international investment banks at the time, but the Swiss bank would still retain a strong presence here through an affiliated partnership with First NZ.
The deal flow in the early years of the decade was fast and furious. In the first half of 2004, First NZ was involved in a two-stage sale of Tenon’s forests to Kiwi Forests and Hancock, Carter Holt Harvey’s sale of its tissues division, and SkyCity Entertainment’s purchase of the Darwin casino.
In the same year, First NZ assisted CSFB in advising Edison Mission Energy on the sale of its Contact Energy stake and then advised Independent Newspapers in its merger talks with Sky Television.
First NZ would also cash in on CSFB’s linkage to New Zealand’s richest man, Graeme Hart, whose purchase of Carter Holt in 2006 paved the way for his lucrative move into global food packaging.
“Credit Suisse was a very big lender to Graeme Hart and essentially funded Rank Group into Carter Holt and then Reynolds Group,” one market source recalls.
A Credit Suisse private equity offshoot floated Feltex on the sharemarket in 2004 only for it to collapse two years later. Photo / File
In 2004 a Credit Suisse private equity vehicle sold carpet maker Feltex to public shareholders for approximately $254 million. Less than two years later the company collapsed into receivership, completely wiping out shareholders’ equity.
CSFB Asian Merchant Partners, which received the proceeds from the Feltex float, became embroiled in a lengthy class action lawsuit, only finally rejected by the High Court in May 2021.
Around the time of the Feltex debacle, the Swiss firm stopped using the Credit Suisse First Boston brand but its strategic alliance with First NZ capital would continue through to early 2021, by which stage the Kiwi firm had rebranded back to Jarden.
Their last couple of deals together were struck during the Covid pandemic, including Auckland International Airport’s giant $1.2 billion capital raise.
They also worked in tandem on the National Government’s mixed ownership programme that started in 2013 and were on the JLM panel for the Meridian and Genesis IPOs.
Former Jarden CEO James Lee, who leaves the firm next week, worked alongside Credit Suisse as CEO of First NZ Capital, seen here at the Infinz Awards.
Outgoing Jarden CEO James Lee, who leaves the firm this week, said the death of Credit Suisse was a sad day.
“CS was a wonderful organisation for a long time. Unfortunately, its ending will be seen as a giant failure of governance as opposed to something systemically wrong with the business. They made some really poor decisions on a consistent basis with multiple CEOs and they lost a lot of good people.”
Lee said over the years Credit Suisse was a huge supplier of capital to the New Zealand market and the landscape would look very different here without its input. “We underwrote lots of things together and they had a massive reliance on us to do it. I don’t know how many deals we did together.
“It’s a funny coincidence that my time in the capital markets in New Zealand ends at the same time Credit Suisse does.”
