Tower plans for Tasman shift

By RICHARD BRADDELL banking writer

Tower's managing director, James Boonzaier, believes parochial sentiment should prove no obstacle to the financial services group shifting headquarters to Australia next year, although 60 per cent of its shares are New Zealand owned and the move requires a 75 per cent yes vote.

The company has set no date for its transtasman leap, but sees it as inevitable as NZ ownership dwindles and its Australian business grows.

Mr Boonzaier said the move might get approval even now, but he believed the increasing presence of Australian institutional shareholders on the register would help swing the vote, which he believed was likely next year.

"I think New Zealanders have become very practical about the issue and I wouldn't bet that they would vote against such a thing at all," he said.

" I think many of them would vote in favour if they believe it is good for the business and good for their share price."

Tower yesterday reported a net profit of $38.9 million for the first half ending March 31, up from $38.6 million for the same period last year.

But it reckons that difficult investment markets trimmed a net $10 million off the bottom line.

Not only did difficult investment markets reduce direct returns, but they trimmed operational fee income based on assets under management, which reduced from $22.1 billion at September last year to $21.2 billion in March.

While market values accounted for some of that decline, the 11 per cent decline in the Australian dollar against the Kiwi was the main cause due to the preponderance of assets now held in Australia.

Mr Boonzaier flatly rejected rumours that Tower was working towards a capital notes issue that might be used to pay for the buy-back of the partly paids, whose outstanding instalment falls due in October.

But chief financial officer Keith Taylor said the rumours might have been associated with work Tower was doing on refinancing debt that fell due in September.

It would like to diversify its sources, he said.

Meanwhile, Tower expects its new Australian financial planning arm, Bridges, to spearhead Australian growth.

Indeed, it is clear that the company has already made the psychological shift to Australia, having set up corporate headquarters at Aurora Place in Sydney.

And for the second time in a row, Mr Boonzaier has delivered his profit announcement via videoconference from Sydney, with his remarks about the likely behaviour of New Zealand shareholders seemingly directed to Australian media and analysts.

"Certainly, after the partly paid shares have become fully paid, most of those belong to Australian shareholders," Mr Boonzaier said.

"If you look at the pattern of our shareholding, more and more of it is going into the hands of Australian institutions."