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The start of the end for Fisher Funds?

COMMENT: Fisher Funds’ acquisition of Tower’s investment business has to be one of the most aggressive deals ever done in the funds management space in New Zealand.

Saturday, March 2nd 2013, 4:14PM 7 Comments

by Philip Macalister

While Fisher has gobbled up a few smaller KiwiSaver schemes, such as First New Zealand, NZ Credit Unions and Huljich, this deal is defining as it includes a big KiwiSaver book and Tower is three times the size of Fisher Funds.

Add to that there are also funds that Fisher has no experience in: wholesale mandates, property, including direct property (assets such as Christchurch’s Merrivale Mall and Bayfair in Tauranga) and books of insurance business.

Perhaps one of the most fascinating things is that Fisher has steadfastly pinned its colours to the growth investment strategy; however Tower is a value-orientated fund manager.

This is a massive mismatch of investment styles. How they will be put together will be watched closely by the investment management market.

While there are all these investment issues there is also the question of how does a business digest something three times it size? It’s a huge task, no matter how successful the business has been to date.

The clear concensus is that the price was a good deal for Fisher. No doubt it wasn’t bad for Tower’s shareholders. After all cornerstone shareholder GPG isn’t renowned for giving assets away.

The role of TSB is probably the most interesting. We don’t know how much the bank paid for its 27% stake or any other details of the transaction.

Just as interesting is that that you have one of New Zealand’s successful entrepreneurs teaming up with a bank. All banks are conservative and little old Taranaki-based TSB is no different.

It’s a mix of styles which could be described as oil and water. But there is a sensible answer to the question of why.

This looks a lot like Carmel and Hugh Fisher’s exit strategy for the business.

Don’t be surprised if this just becomes another example of a bank adding a wealth management business to its books.

Also don’t be surprised to see the Fisher brand name disappear over time. Just like Tower’s is disappearing now.

« [Weekly Wrap] Fisher buys TowerFund managers call for level playing field »

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Comments from our readers

On 4 March 2013 at 8:56 am Mr Me said:
I’m a bit torn on this issue. On the one hand, hard working people such as the Fishers’ deserve to have an exit strategy to monetise their efforts. However, over recent years my investments within Tower have shifted from external managers, to in-house value management, to a new style altogether.

As with those who followed Gareth Morgan, it would seem that my investments are simply collateral for these trusted icons to leverage up their personal wealth. It doesn’t leave me with a huge amount of confidence in the industry.
On 4 March 2013 at 10:55 am Stan Walker said:
Mr Me. You are correct, I can assure you that the client doesn't feature too highly in these transactions.
On 4 March 2013 at 10:59 am Eric said:
Interesting points Mr Me. I'm in Tower's KiwiSaver fund and also invest in some of Fisher's listed entities.
Moving KS across isn't of much interest so it's time to find a new manager.
On 4 March 2013 at 4:48 pm The Editor said:
@waterfall. Carmel and Hugh Fisher are the biggest shareholders. (A majority stake I beleive).
Second biggest is TSB now.
Morrison is a much smaller stake and it appears its holding has been diluted in this deal.
This fits with the notion that TSB will eventually end up owning the business.
On 4 March 2013 at 6:35 pm Mas said:
Fisher need to take a leaf out of AMP's book, and remove the clients from the KiwiSaver Default fund, and stick them in their own scheme. This ensures that it removes control completely from the Crown.

I disagree with the others , as to me this seems a good deal for Fisher. Also, unlike others, Fisher are good at looking after clients, as they seem to care about them. The thing that is hard to figure out is what TSB's strategy is in all of this. Given that to date they have simply lived in the land of handing clients to SuperLife, I guess this has to be some sort of improvement. From a strategic perspective, for TSB it might be like swimming. If you have no idea how it works, one option that looks workable is to just jump in the deep end and give it a crack. Hopefully the life guard Fishers them out!
On 4 March 2013 at 7:40 pm traveller said:
What's TSB's strategy? Probably they have none, it just seemed a good idea to line up with the rest of the banks.
On 17 March 2013 at 4:24 pm brent sheather said:
mas you need to read the fine print a bit more carefully and remember that talking the talk ain't the same as working the walk.

Traveller I'm sure you are right..TSB are late to the party..arriving just as margins are about to contract...

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