Fisher Funds buys Tower for $79m with help from new shareholder TSB

Fisher Funds, co-founded by Carmel Fisher (pictured), has extended its reach in the funds management business, buying Tower Investments for $79 million in a deal backed by new shareholder TSB Bank.

The deal will grow Fisher Funds' funds under management to more than $5 billion from its existing $1.4 billion, following on from its acquisition of the KiwiSaver portfolios of First NZ Capital, Huljich Wealth Management and the New Zealand Association of Credit Unions over the past three years, the company says in a statement.

Taranaki-based TSB is supporting the purchase for an unspecified amount and will take 26 percent of the fund manager and get board representation.

"Tower's decision to sell its funds management business has created the opportunity for Fisher Funds to attain scale that will provide efficiencies in the management of clients' funds, while still allowing for the high quality personalised services that we are known for," managing director Carmel Fisher says.

"We anticipate that there will be synergies to be gained from the amalgamation of back office services and benefits of scale to be achieved from key suppliers which in time will flow through to investors in the form of a wider range of services and even more competitive fees," she says.

The acquisition comes as the government reviews the default KiwiSaver schemes, including Tower, with officials keen on aligning fund managers' incentives with long-term returns for investors. TSB's involvement in the acquisition echoes KiwiBank's purchase of Gareth Morgan Investments last year.

Tower has been looking to sell its investment business since it completed a strategic review last year as a means to provide value for shareholders, and comes after November's sale of its medical insurance unit to ASX-listed Nib.

Tower's scaling back of its business comes as cornerstone shareholder Guinness Peat Group liquidates its portfolio.

"The focus for Tower going forward will be on growing our traditional core insurance business through offering superior products backed by market leading customer services," managing director Rob Flannagan says in a separate statement.

 

All Tower Investments staff, including chief executive Sam Stubbs, will transfer to Fisher Funds.

Fisher Funds has the right to use the Tower brand of 12 months from settlement, scheduled for April 2, and will manage Tower's internal funds for five years.

(BusinessDesk)

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I wonder if Carmel will gross up the Tower management fees to her higher fee levels...

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