BNZ Investments has given notice to all third-party fund managers looking after Australasian assets in a move that will likely see Castle Point, Mint, Nikko and the First Seniter RealIndex stripped of mandates.
The decision follows the formal Jarden shareholder vote last week approving the creation of FirstCape – the new entity set to house Jarden NZ wealth management, JBWere NZ, BNZ Investments (including its KiwiSaver scheme) and Harbour Asset Management.
It is understood the BNZ Australasian assets will shift to Harbour funds once the FirstCape transition completes some time next month.
The underlying manager clean-out was flagged in previous FirstCape communiqués, noting the ability of the now $5 billion BNZ KiwiSaver scheme to access “Harbour’s asset management capability”.
However, the call has come much sooner than anticipated for the current line-up of external BNZ fund local managers who have served up to four-and-a-half years with the bank-owned investment business.
BNZ launched its KiwiSaver scheme in 2013, initially using Russell Investments as an implemented solution before moving to a mainly passive style in 2019 under the-then new head of wealth, Peter Forster, but with an active Australasian equities portfolio managed – at first – by Mint and Nikko.
The bank-owned investment scheme later awarded an Australasian equities mandate to Castle Point while removing Nikko (which picked up a local fixed income gig for BNZ as replacement for AMP Capital).
At the same time, BNZ handed the factor-based RealIndex about half of the Australasian shares portfolio.
Mint and Castle Point stand to lose about $280 million apiece once the BNZ manager transition goes ahead: as at the end of March last year, RealIndex managed about $420 million for BNZ KiwiSaver scheme while the Nikko local bond allocation stood at about $430 million.
BNZ also uses the same third-party managers (as well as other options) for the retail YouWealth suite of funds and the Private Wealth Series but KiwiSaver remains the most important distribution source.
The BNZ global asset managers including State Street and Columbia Threadneedle won’t be affected by the latest shake-up.
BNZ investment consultant, JANA, is also expected to remain on board as the FirstCape changes roll through.
According to the BNZ investment entity accounts for the 12 months to the end of September last year, the group turned a net profit after tax of about $7.7 million on operating income of $34.7 million and $24 million in costs: the business comprises the KiwiSaver, YouWealth, Private Wealth and cash PIE funds.
Under the now Jarden shareholder-endorsed plan, the BNZ fund business will operate alongside Harbour and the JBWere/Jarden NZ advisory arms as FirstCape. The restructure will likely see the BNZ investment team of about 20 merge with Harbour.
Last week more than 98 per cent of Jarden shareholders voted in favour of the FirstCape proposal that will free up almost $100 million in cash to ease debt incurred in the wealth manager’s investment banking foray across the Tasman.
In a statement, Malcolm Jackson, FirstCape chief-in-waiting, said: “The majority vote demonstrates that shareholders recognised the value of the deal. We now move forward with greater clarity of FirstCape’s future – in which Jarden Group will have a 20% stake.”
BNZ parent, National Australia Bank, will own 45 per cent of FirstCape via a NZ entity with private equity firm, Pacific Equity Partners, to hold the remaining 35 per cent.
Once all the pieces are in place FirstCape will house 113 financial advisers, $29 billion in funds under advice or administration (in JBWere and Jarden) and $15 billion of assets under management in the combined Harbour/BNZ group.
Jackson said in the release that the business unification should be finalised by the end of April while in the interim “nothing changes for the clients of JBWere, Jarden and BNZ”.
Further rationalisation is likely over the longer-term, however, especially in items such as technology and back-office service providers.
