Cash-rich South Canterbury Finance Group has bought part of the loan book from troubled Nelson company Finance and Investments and signalled it was looking at other possible purchases.
With an estimated $400 million in cash and undrawn bank loan facilities, South Canterbury Finance (SCF) is ideally placed to grow its business through acquisitions, and paid an undisclosed sum for 12 business and 330 consumer loans from Finance and Investment.
The Nelson company was placed in receivership last September owing $16 million to 370 investors and has been under the control of PricewaterhouseCoopers.
But this may not be the end of purchases by SCF from the troubled finance company sector, company chief operations officer Peter Bosworth says.
He said SCF had been approached by other finance companies and while it would look at opportunities, it was careful about what it bought.
The key to SCF's success, he said, was diverse investment segments across business, rural, plant and machinery, property and consumers, as well as diverse regions.
"We're well weighted across all segments and it gives us a good diversity,'' he said.
New Zealand's largest privately owned finance company, the SCF group is also geographically diverse, with 15 regionally based finance companies.
Mr Bosworth said a prospective purchase needed to have a quality lending book and satisfy customer profile and business-type criteria.
"Most bigger companies are skewed one way, either towards property or consumer,'' he said.
Finance and Investment was a small operator but the part of the business bought by SCF, met its criteria.
Mr Bosworth said SCF subsidiary Tasman Bay Finance would complete the purchase, which would be effective from last Monday.
Proceeds from the sale would allow some investors to be repaid, he said.
"Like any company in trouble at the moment, they need to get money back in so they can pay debenture holders,'' Mr Bosworth said.
It would also allow SCF to strengthen its position in the Tasman region and its profile as a nationwide finance company.
"We were keen to strengthen our presence in the region after establishing Tasman Bay Finance two years ago.
"The purchase is part of our long-term strategy to strengthen our profile as a truly nationwide finance company but still retain a strong local touch.''
SCF's underlying strength was reinforced by credit rating agency Standard and Poor's giving it a rating of BBB-, and it recently announced a record six-month net profit to December 31 of $64.4 million, assets of $1.85 billion and equity of $270.8 million.
Last November, SCF increased its bond offer to a maximum of $125 million following demand from investors and it also secured a new funding line from a private placement from the United States.
