The New Zealand government has acquired 100% of Kiwibank’s parent company, Kiwi Group Holdings (KGH).
KGH, which also operates New Zealand Homes Loans, had been owned by NZ Post, ACC and the NZ Super Fund. Under the terms of the agreement when ACC and NZ Super Fund became shareholders in 2016, the government had first right of refusal over any future sale of shares. As part of the agreement, Kiwibank and NZ Home Loans will continue to operate independently. The Crown’s ownership of KGH will be expressed through a newly incorporated Schedule 4A company, Kiwi Group Capital (KGC), with a separate board.
The transaction valued KGH at NZ$2.1bn (US$1.4bn). The process of acquisition will be a transfer of assets and it will not change the overall value of the Crown’s consolidated balance sheet. It does require the government to fund its contribution for the purchase, which will be done through the multi-year capital allowance. This means the cost to purchase is already part of the borrowing program published in the country’s 2022 budget.
Grant Robertson, Finance Minister of New Zealand, said, “The transaction ensures Kiwibank remains 100% Kiwi-owned, a bottom-line pledge that the previous national government also made in 2016 when the current ownership arrangements were entered into. While the Crown essentially owned KGH through Crown-owned entities, an ongoing shareholding in Kiwibank did not fit NZ Post’s and ACC’s long-term strategic and investment plans. NZ Super Fund had been interested in purchasing a majority holding in KGH but withdrew its interest as it did not align with the government’s commitment to public and New Zealand ownership.
In turn, a NZ Post spokesperson stated, “Kiwibank was established in 2002 as part of an NZ Post business strategy to better leverage our then retail assets and as part of the NZ Post Group’s diversification. A lot has changed in the 20 years since – mail has continued to decline and the NZ Post parcel business has grown rapidly, both the NZ Post and Kiwibank physical retail store models have transformed and customer needs have diverged. We are extremely proud of the part that we have played in creating a bank for New Zealanders.
“Although it previously made sense for NZ Post to have ownership of Kiwibank (KGHL), as NZ Post has focused more on the core delivery business (which is very different from what it was in the early 2000s), ownership of KGHL no longer aligns with the work that we do. NZ Post also recognizes that Kiwibank’s continued future success will rely on further capital investment. This is the final step in our ongoing separation from Kiwibank (KGHL) and allows us to focus solely on our delivery business. The sale is conditional on approval by the Reserve Bank of New Zealand (RBNZ).”