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NZX refocuses, heralds wealth growth

NZX has signalled plans to grow its Wealth Technologies platform further, despite long delays in bringing on its first customer.

Wednesday, February 20th 2019, 6:00AM 1 Comment

Delivering its annual result, the NZX noted that a major milestone had been achieved for the platform when it brought Craigs Investment Partners on in 2018.

The deal had been announced three years earlier.

NZX Wealth Technologies is a wealth management business owned by the NZX, offering a platform for advisers and providers to manage, trade and administer their clients' assets.

“This platform is a leading piece of market infrastructure,” chief executive Mark Peterson said.

“Core platform development did take longer than expected and resulted in a drag on operating earnings, but the platform’s successful launch achieves our core objective to create a leading piece of New Zealand financial markets infrastructure. The team are now reaching out to the pipeline of potential customers who have shown a strong interest in the platform as we pursue opportunities to leverage our investment in this business.”

The second phase of that Craigs deal would begin shortly, with analysis and design to commence in 2019.

If it went ahead, it would seen the admin of Craigs' business brought over to Wealth Technologies.

NZX wants Wealth Technologies to hold $30 billion by 2023.

Hobson Wealth Partners was also considering shifting to NZX Wealth Technologies but that was put on hold.

Peterson also praised the performance of the NZX's fund management brands Smartshares and Superlife.

He said they were core to growing market participating in the exchange business.

“We reshaped this business in 2018 to develop more operating leverage, and shareholders should expect this to continue in 2019. Maximising shareholder returns remains front of mind, this means the board remain open minded about Smartshares’ future ownership structure.”

NZX said funds under management and member numbers grew strongly ahead of forecasts, which allowed it to offer lower fees on some funds in the year.

Smartshares operating earnings for the year were up 29% and expenses increased 5.4%.

NZX plans to restructure SuperLife this year to offer funds as standalone investment products rather than restricting them to the superannuation framework.

The stock exchange operator reported profit of $11.6 million in 2018, down from $14.8m the year before.

It said that was the result of a decision to focus on its core capital markets business, which meant the disposal of non-core businesses and related impairments of $3m.

Chairman James Miller said progress had been made to the platform and the growth prospects of the core business, so the time was right to take an active leadership role in the industry.

That had led to the announcement of the Capital Markets 2029 programme, which is designed to help bring more listings to the market.

Macdonald said discussions on the plan, conducted with the Financial Markets Authority, started 15 months ago in response to industry concerns.

“The purpose of Capital Markets 2029 is to consider opportunities to improve the effectiveness of the capital markets ecosystem, and in particular, to remove blockages in the capital formation process in respect of initial equity public offerings.”

The results flag that Fundsource remains for sale although it is believed a sale is imminent. It is now worth $435,000, according to the accounts. A spokeswoman said there was nothing to report yet.

Tags: NZX Smartshares

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Comments from our readers

On 20 February 2019 at 6:05 am Pragmatic said:
I am curious that Fundsource is supposedly now worth $435,000. Other than convincing a few managers to pay for a rating, and selling recognition-rights of annual awards to the lucky recipients, I'm unaware of the revenue model for Fundsource. To my knowledge, there are very few (if any) dispensers of advice who rely (or even subscribe) on Fundsource as their source of information - with Morningstar continuing to have dominance in the retail sector.

It'll be interesting to understand who the successful bidder for the Fundsource business is, and more importantly, how they will look to recoup their $435,000 investment.

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