PGC's Torchlight Securities sells down Heartland stake in $4.9M sale

Thursday 17th May 2012

Pyne Gould Corp subsidiary Torchlight Securities sold down its stake in lender Heartland New Zealand for $4.9 million in an on-market sale yesterday.

The Torchlight unit, which holds Pyne Gould's shares in Heartland and PGG Wrightson, sold 9.4 million shares, or 2.4 percent of the financial services firm, according to a substantial shareholder's notice. The sale takes Torchlight's stake in Heartland down to 9.8 percent from 12.2 percent.

The shares sold at 52 cents apiece, according to NZX data, and Heartland's stock fell 3.9 percent to 50 cents today. Heartland is rated 'outperform' according to a consensus of two analysts compiled by Reuters, with a target price of 60 cents.

In March, Pyne Gould cut its stake in Wrightson to 7 percent, while at the same time building its investment in Heartland by the same amount.

Earlier this month, the Financial Markets Authority said it was looking into Pyne Gould’s related party transactions, which along with complaints about the wealth manager's governance, prompted auditor KPMG to quit its role with the company.

The auditor's resignation came a week after managing director John Duncan expectedly stepped down after joining Pyne Gould in 2009 from a 15-year career with Macquarie Group.

Businessman George Kerr replaced Duncan with immediate effect, having taken control of Pyne Gould via his Australasian Equity Partners No 1 LP (AEP) venture with US hedge fund Baker Street Capital.

Kerr became involved in Pyne Gould in 2009, taking a cornerstone stake after the company faced large writedowns on the value of its Marac finance unit's property loan book, which has since been divested.

Since his involvement, Pyne Gould has taken stakes in the Kerr-managed Torchlight funds, which specialise in squeezing value out of distressed assets, and its board approved increasing the capital available to Torchlight to “seek modest investments beyond the Torchlight fund.”

Pyne Gould's shares were unchanged at 31 cents in trading today, valuing the company at $67.2 million.

BusinessDesk.co.nz

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