Rebecca Thomas brokering a special type of Kiwi peace

Rebecca Thomas is emerging as an advocate for shareholders' rights and reform of the securities industry. Herald file picture

When Rebecca Thomas decided to leave the world of high finance in the City of London, she had no idea she would end up as chief investment officer of New Zealand's second-largest fund manager.

Telecom had head-hunted her husband, Johnathan - 15 years her junior - from Hutchison Whampoa's "3" third-generation mobile phone service to help the New Zealand company with its plans.

She had just given birth to the first of two sons and completed a three-year commitment to stay with Johnson Fry, the listed fund management company she had led then sold to US investment house, Legg Mason.

She planned to land in New Zealand, see what was on offer and perhaps do her own thing. But after telling a UK recruiter of her plans, she was sold the opportunity and, within days of landing, she had the ING job, replacing David McClatchy, who went to Australia.

A year and a half into the job, and Thomas, a law graduate of Reading University in southern England, has proven true to her word.

Apart from calling the shots for ING New Zealand's $7 billion plus fund, the Briton is emerging as an advocate for shareholder rights and reform of the New Zealand securities industry.

Her latest move, which came to fruition last week, was helping to break the deadlock between large investment funds and the manager of Kiwi Income Property Trust over the governance of what is New Zealand's largest property company.

The manager's reluctance to put unit holders' resolutions to the property trust's annual meeting in September and acrimony over Kiwi's huge Sylvia Park development near the southern motorway sparked the formation of an investor coalition calling for reform of the trust.

Thomas led negotiations with the trustee, drafting the since-carried resolutions that make a start on aligning Kiwi's governance with those of most other listed companies.

The moves, which set a precedent for the governance of all property trusts, cut the threshold for unit holders to requisition meetings from 10 per cent to 5 per cent, laid out clear time limits for convening meetings and made it easier for unit holders to put matters up for discussion.

Thomas said the outcome was positive, but more needed to be done.

She and other investors such as Brooke Asset Management's outspoken principals, Simon Botherway and Paul Glass, want the trust manager to appoint independent directors to their boards.

Her success is perhaps no wonder. In 1997, at 33, when she took the reins of Johnson Fry, she was the UK's youngest female chief executive of a publicly listed company. In that role, she lifted funds under management from 300 million to 3 billion over five years.

She admits to a penchant for interior design, but adds she could never be a housewife looking only to the needs of her husband and sons.

Speaking at speed and with irreverent lucidity, she says: "It is not in my makeup to do things only at 80 per cent of my capacity. I am committed. I do not think I am going to turn myself into a housewife, because I think I am too old to change my spots."

She says the role is a step backwards, but top positions rarely come up in such a small market. "The reality is I wanted to get involved and it was an opprtunity that came up."

Apart from Kiwi, she takes aim at New Zealand's financial regulation. More needs to be done to bring it in line with international jurisdictions.

She says the split of securities and investment oversight between several different bodies such as the Securities Commission and the NZX is deficient.

New Zealand faces difficulties in combating money-laundering because there was no standard for checking identity. Instead, the Government should create one super-financial regulator such as the UK's Financial Services Authority.

"I think unless you accept you need an overarching regulator from which you are all assessed, you are going to end up driving through piecemeal bits of legislation that do not fit together and you are going to end up on the back foot."

New Zealand's taxation system is weak. The latest plans to slap a capital gains tax on international shares, remove such taxes on collective investment vehicles are flawed, especially as they do nothing to address the tax advantages enjoyed by residential property investment. She argues for a level playing field between all different investment classes.

"The taxation of managed funds here makes people invest directly in equities rather than through managed funds.

"Tax also pushes money into property, not just in the primary markets, but also in the tertiary and secondary markets.

"I think the investment market here is the main problem, not people's own residence. People think they can punt on the stock market without having to pay tax."

Other bug-bears: companies' reluctance to accept currency risk as an inevitable part of their business; the failure of the New Zealand funds to support big new issues to encourage a deep and wide sharemarket. She also says NZX and the investment banks' must accept some responsibility for the dearth of new listings.

"The market has a challenge to get more companies listed and to reflect the economy and fund managers need to support them."

She believes investment bankers and investors should have lobbied for instance for the flotation of Progressive Enterprises, owner of the Countdown, Woolworths and Foodtown chains.

The chain was put on the market by Australia's Foodland Associated and acquired by Woolworths.

"I think for these sorts of things to happen, you need to stand up and be counted and ... pay over the the odds in order to build a long-term position," Thomas says.

Still she rates the skills of New Zealand fund managers.

They are well educated and more experienced in the ebbs and flows of financial markets than their counterparts overseas.

"I have worked with more chartered financial analysts than I have overseas.

"In the UK, it is teenage scribbler territory, [for people] who are in for a couple of years to see if they are any good at it and then bugger off.

"We see here a higher percentage of fund managers who outperform the local index than fund managers in the US and the UK.

"The fourth [lowest] quartile here is to be in line with the index over time."

She is not sure whether she is committed to New Zealand.

She finds the country small and lacking the big city buzz she enjoyed when living in London.

Auckland-based, she "could not live anywhere else in New Zealand".

Ironically, however, she goes to more theatre and concerts than she ever did in the UK. There such events were on tap, but here she feels she must attend, if only to keep the international acts coming.

In the coming year, ING favours international shares over domestic.

"Local markets do look expensive. If you look at the long-run charts, it has been difficult for the markets to command a prospective 15 times earnings and it has usually been then in anticipation of a recovery.

"Our view is that it is difficult to buy the overall market. However, we have got no problems finding things that we want to invest in and things that we like and we believe will continue to do well despite the more difficult market conditions."

She highlighted the prospects of Pumpkin Patch and Fisher & Paykel Healthcare.


Rebecca Thomas
Chief investment officer ING New Zealand, managing a $7 billion plus fund - the second largest after AMP.
* Age: 43
* Married to Johnathan Eele. Two children Oscar (4) and Digby (2).
* Educated: Reading University in law, qualified as a barrister.
Career:
* 1987: Small companies analyst, Framlington.
* 1990: Director, Framlington.
* 1996: Joins Johnson Fry as head of asset management.
* 1997: Becomes chief executive of Johnson Fry.
* 1999: Sells Johnson Fry to Legg Mason.
* 2002: Quits Johnson Fry.
* 2004: Joins ING New Zealand .