by David Chaplin
First NZ Capital has beat out software giant DSTi and signed up the UK insurance and investment giant Standard Life in a deal that will transform it from a tiny local player into one of the world’s biggest portfolio administration services.
The agreement signed last Friday in Edinburgh gives First NZ Capital the opportunity to administer a large portion of the GBP110 billion (approximately NZ$270 billion) Standard Life currently has under management.
UK press reports have speculated that Standard Life has priced its new wrap service at 60 basis points – First NZ’s proportion of that is unknown, however, standard wholesale wrap administration fees can range up to 10 basis points.
When the deal was first flagged in August 2004, Adrian Durham, at the time First NZ chief operating officer, said: “This business is 10 times bigger than the entire Australian wrap market.”
“Our expansion into the UK will rapidly position FNZ as one of the largest providers of wrap platforms globally, providing benefits to all our customers,” Durham said in a statement last week.
It is understood the other company in the final short-list for the Standard Life wrap administration business was the huge US-based back-office software firm DSTi.
The Standard Life business should also end speculation in New Zealand that without major institutional backing the First NZ Capital platform would be vulnerable.
Currently, First NZ Capital has about $3 billion funds under administration, including over the $600 million BNZ business it won from Ausmaq over a year ago.
As well a number of independent financial planning groups use the First NZ product, such as Professional Investment Services, which is testing out a version of its badged product, Discovery, in its home country Australia.
However, the deal has not met without criticism in the UK where press service Citywire has reported that it “… has surprised some observers who feel Standard could face challenges adapting First NZ’s system to the different tax and regulatory rules in the UK”.
But Durham has expressed confidence that the First NZ Capital platform can handle all the UK tax idiosyncrasies and will be ready to roll out the Standard Life product for its scheduled launch early in 2006.
He said the group has had a team of 25 people working full-time n Edinburgh since June this year implementing the wrap, a number which is expected to grow to 40 before the Standard Life service is finally launched next year.
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