A government promise for Kiwibank to remain in New Zealand hands looks good for five more years, at least, if an offer from ACC and the NZ Superannuation fund is approved.
New Zealand Post, the owner of Kiwibank, has received a $495million indicative offer from the two state-owned entities to buy 45% in Kiwibank. ACC would take a 20% share and the super fund 25%.
Both ACC and the super fund are experienced investors on behalf of taxpayers and the super fund was part of the purchase of Shell NZ, which became Z Energy.
Both Prime Minister John Key and Finance Minister Bill English have recently stated Kiwibank was not for sale and would remain in New Zealand hands for as long as the National-led government remained in power.
If the deal goes ahead, the Government is partially selling down Kiwibank, as it did with the energy companies. But this time, it is selling the asset to itself, through its state entities.
The danger some commentators see is after five years, ACC and the super fund could choose to sell off their stakes to an overseas investor.
NZ Post loses about $30million a year but is propped up by Kiwibank which has proved popular with New Zealanders and profitable for the Government. NZ Post provided about $400million of capital to Kiwibank since it was set up 14 years ago, funded by debt.
The indicative offer, which is subject to several conditions including due diligence and board and regulatory approval, values Kiwi Group Holdings, the owner of Kiwibank, at $1.1billion.
NZ Post chairman Sir Michael Cullen said the offer reflected the Government's ‘‘absolute position'' Kiwibank must remain in public ownership.
‘‘No deal has been finalised yet and it will take some weeks for a process to be worked through. However, we wanted to be proactive in our disclosure.''
Under the deal, the Government would have pre-emptive rights to buy shares that either the super fund or ACC wanted to on-sell.
State Owned Enterprises Minister Todd McClay said the proposal could provide benefits for Kiwibank, NZ Post, ACC, the super fund and taxpayers but it needed to stack up for all parties before it proceeded.
Craigs Investment Partners broker Chris Timms said the deal would give NZ Post some much-needed capital to deal with the problems it has, such as falling mail deliveries.
It would be business as usual for Kiwibank, and rating agency Standard & Poor's said the deal would have no immediate impact on group ratings.
‘‘This sends an important message to New Zealanders of Kiwibank remaining in Kiwi hands.''
NZ Post would still maintain control with a 55% stake. The extra cash would help Kiwibank make further inroads into the marketplace.
The investment would also allow ACC and the super fund to diversify their holdings.
Both had been pumping millions of dollars into New Zealand's ‘‘skinny market'' - the NZX, Mr Timms said.
Not all people were happy with the offer. Act New Zealand leader David Seymour said the partial privatisation was just reshuffling deck chairs.
‘‘The New Zealand taxpayer will still bear all the risks of investing in a bank. It would have been braver and better to sell part or all of Kiwibank to private owners.''
The successful mixed-ownership model applied to Mighty River Power, Meridian and Genesis was a compromise on privatisation. The Government selling part of Kiwibank to other government entities was a compromise on a compromise, he said.
The Taxpayers Union said the partial sale was a missed opportunity for the Government to get the potential liability of a Kiwibank ‘‘failure'' off its books.
Executive director Jordan Williams said from the point of view of taxpayers, there was nothing more worrying than a government-owned bank.
Politicians were already piling on pressure for the bank to undercut the other large banks, directing Kiwibank to take on loans the other banks had decided were too risky.
‘‘It is a recipe for disaster should New Zealand's housing market bubble burst or there is another global financial crisis.''
Sir Michael said the NZ Post board believed securing an agreement with the two Crown entities would significantly benefit Kiwibank long-term.
The proceeds of the sale would be used by NZ Post to invest in its core parcels, packages and letters business and pay down debt, along with a special dividend to the Crown.
When considering the possible transaction, it became clear to the board NZ Post would need to change its guarantee of Kiwibank's payment obligations in the future, he said.
At a glance
•ACC and the NZ Superannuation Fund have made a bid to buy 45% of Kiwibank between them.
•The deal will be worth $495million and values Kiwibank at $1.1billion.
•The deal follows the mixed-ownership model but this time, the Government is selling an asset to itself.
•If approved, the deal guarantees New Zealand ownership of Kiwibank for at least five years.
