Strategic shareholders sell stake to Allco Finance

Specialist property finance company Strategic Finance has positioned itself to capitalise on long-expected consolidation in the finance company sector by shacking up with Australian private equity giant Allco Finance.

Strategic said yesterday that its six shareholders had sold a 50 per cent stake in parent Strategic Investment Group to Australian private equity outfit Allco.

Allco, whose subsidiary Allco Equity Partners last year made an unsuccessful play for control of Baycorp Advantage, specialises in asset-based financing.

It is active in the aviation, shipping, rail, financial services and property sectors and manages assets valued at over A$7.6 billion ($8.7 billion).

Strategic Finance is a specialist real estate lender which raises most of its funds from debentures.

Allco Finance Group chairman David Coe said it had invested in Strategic because it recognised "the inherent quality and value in the New Zealand company, as well as the potential for growth into the New Zealand market".

Strategic Finance chief executive Kerry Finnigan said Allco could potentially help identify and fund acquisition opportunities for Strategic in the present environment in which a consolidation in the finance company sector was being tipped by several commentators.

Finnigan said Allco also saw value in Strategic's property development finance expertise.

"Allco don't have as much skill or expertise in that sector. They saw us to be best in our specialty and felt that we could bring a level of skill to the Australian market."

Finnigan said Allco was a pretty substantial business, and its involvement would give Strategic access to new capital markets and other benefits "so it's a good relationship to have".

He also said Allco specialised in "some rather clever lease transactions" which it was hoped could be of use within the Strategic Group.

This month, Strategic announced a December-half profit of $12.3 million.