Pyne Gould to buy Equity Partners for $18m

Tuesday 21st July 2009

Pyne Gould Corp., the finance group aiming to become a bank, agreed to acquire Equity Partners Asset Management, an asset manager controlled by Pyne director George Kerr for $18 million.

The transaction is part of arrangements that will bolster Pyne Gould’s asset management business and allow its MARAC Finance unit to offload impaired loans on development properties, it said in a statement today.

Pyne Gould will initially acquire about $160 million of impaired or likely to be impaired loans from its MARAC unit, paying cash over time that will allow MARAC to buy government and bank securities to strengthen liquidity. The loans will subsequently be acquired by a new unit, Torchlight Credit Fund, one of the arms of Pyne Gould’s enlarged asset management unit, to be called Perpetual Asset Management.

To allow Torchlight to acquire the loans at fair market value, Pyne Gould will take a one-time charge against its June 30, 2009, results of $60 million to $65 million, it said. That includes the $22 million after tax charge already taken in the first half.

“PGC has not been immune to the impacts of the credit crisis,” chairman Sam Maling said in the statement. Still, “losses we have suffered are comfortably within the group’s capital capability.”

Shares of Pyne Gould rose 1.1% to $1.80 and have declined 44% in the past 12 months.

Perpetual Asset Management will have the management contract for all of Pyne Gould’s funds, including Torchlight, which will specialise in commercial and residential real estate asset backed credit and may become the largest fund of its type in New Zealand, the company said.

Perpetual “sees the New Zealand property sector as a classic counter-cyclical opportunity with very significant value creation potential for a patient investor,” it said.

“Property lending will continue to be a core part of the New Zealand financial system despite the savage realignment in values during this part of the cycle,” said Kerr, who will chair the asset management business.

Pyne Gould said it will retain its 20% holding in PGG Wrightson, which will become a “long term seed asset for a significant agri-business fund.”

Pyne Gould plans to expand the capital of MARAC once it has determined the level required to support a banking licence, it said. Kerr has indicated his willingness “to play a major role in underwriting the capital expansion programme,” it said.

Businesswire.co.nz

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