Forsyth Barr shopped stake to rivals before Mercury Capital buyout
Forsyth Barr was understood to be quietly having discreet conversations about a possible sale to prospective buyers before it inked a deal with Sydney-based private equity firm Mercury Capital, say sources.
Last month, Forsyth Barr, chaired by former Fairfax Media boss and All Black captain David Kirk, entered into an agreement with Mercury Capital, run by former Goldman Sachs New Zealand boss Clark Perkins, to buy between 25 per cent and 30 per cent of the business.
It is one of New Zealand's most prominent wealth management and investment banking businesses, while Mercury Capital has more than $1bn of funds under management and has been keen to gain industry exposure for some time.
DataRoom understands that a conversation was had by Forsyth Barr with investment bank Barrenjoey, the Australian-based firm with which Forsyth Barr already has a strategic partnership.
They agreed in 2022 to share access to research, advisory and capital market services for clients.
Barrenjoey declined to comment, and Forsyth Barr denies it has been for sale or made approaches.
The suggested approach comes amid speculation as to whether Barrenjoey would consider a move into private wealth.
Some are betting an exodus of advisers from well-established market players such as Crestone to be the catalyst, as it remains subject to an earnout from its owner, LGT, that comes to a head by next year.
Once that performance hurdle is met, some think advisers from Crestone could leave and join an investment bank like Barrenjoey.
Barrenjoey is run by former operatives at UBS, the Swiss bank where most of the Crestone advisers came from, and Crestone is the spin-off of the old UBS Wealth Management business, formed through a management buyout.
Barrenjoey was founded by key UBS operatives including the former country head Matthew Grounds, but it does not currently operate in private wealth.
Some think it is a natural progression for the Sydney-based investment bank that launched in 2020, as it looks to establish diversified earnings streams that provide a defensive backstop for years when there are fewer fees earned from its core operation of investment banking.
Barrenjoey has denied the private wealth market is an area of interest, but that has not stopped many in the industry speculating about a future move into the area.
Any moves would all be part of the flux that could play out in the coming years, with questions surrounding whether NAB will eventually offload JBWere in Australia after divesting its New Zealand operations.
Australia's wealth management industry is growing, with assets under management projected to reach $US1.93 trillion this year, according to data from Statista.
Assets under management are expected to grow at a compound annual growth rate of 0.07 per cent resulting in a market volume of $US1.9 trillion by 2029.
Many see JB Were in Australia as the prize in terms of private wealth mergers and acquisitions activity, but it is currently not for sale. However, that is expected to change in future years.
Jarden Group's FirstCape wealth management business would be in pole position to pounce on the operation should it become available. Jarden Group sold part of its wealth management business to Pacific Equity Partners while also merging it with JB Were New Zealand.
The business is now 20 per cent owned by Jarden, 35 per cent owned by PEP and 45 per cent owned by NAB. Expectations are that it will broaden its reach into the Australian market.
Last year, private equity firm TA Associates, which owns 34 per cent of New Zealand's Fisher Funds wealth business in New Zealand, bought Kiwi Wealth in 2022 for $NZ310m and purchased a stake in Kiwi wealth business and broker Craigs in December.
Meanwhile, there's constantly attention surrounding the future of Shaw and Partners, which is owned by global banking group EFG International and run locally by Earl Evans, and also the Bruce Mathieson-backed Ord Minnett.
Crestone agreed to sell the business in 2022 to the interests of the Liechtenstein royal family, known as LGT Group, in a deal that valued the business at $475m. Bridget Carter DataRoom Editor
Bridget Carter has worked as a writer and editor for The Australian's DataRoom column since it was launched in 2013, focusing on capital markets, mergers and acquisitions, private equity and investment banking. She has been a journalist for more than 18 years, covering a broad range of events and topics, including high profile court cases and crimes, natural disasters, social issues and company news.
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