Harts NZ presence under a cloud
The future of the Harts Group in New Zealand, formerly Reeves Moses InvestorCare (RMI), is up in the air, after its listed parent company in Australia ran into trouble and the New Zealand operation dealt with a crisis in its contributory mortgage business.
Harts financial services general manager John O'Sullivan confirms that the group's model and structure is being revisited.
"We are not running under the same model Reeves Moses did."
RMI's goal was to open lots of franchised offices nationwide. When Harts bought the group it aimed to roll up of financial planning and accountancy firms and in the past year it bought two accountancy firms.
However, that strategy is being revisited, and the three parts of the group, portfolio management, accounting and contributory mortgages, could be separated.
O'Sullivan says various options are being considered for the portfolio management group including outright sale, a strategic partnership and a management buyout.
He says the group is viable in its own right and quite an attractive business.
He won't name names, but sources suggest Tower (or an associated company such as Goldridge), Armstrong Jones and AXA are interested in doing a deal.
The portfolio management group has bought back five offices - Wellington, Tauranga, Taupo, Napier and Hamilton. The Palmerston North franchise has been sold to its previous advisers. Meanwhile, the Rotorua office has been merged with Tauranga and Nelson franchise has been cancelled and that operation is now part of a different planning group.
O'Sullivan says the main reason for buybacks was to increase the profitability in a combined financial planning and accountancy practice.
O'Sullivan says that development has been hindered by the problems with Harts in Australia. That company has battled a number of issues and its share price has fallen from a high of almost A$1.60 to its current price of A0.09c.
In New Zealand the problems with the contributory mortgage business has been a financial drain on the group.
O'Sullivan says over the past 18 months Harts has had to put $2.5 million into fixing the business. This includes legal and accounting fees, plus putting money into some of the mortgages.
"We are hopeful of getting that ($2.5 million) back through litigation which is in train."
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