NZ News 31/08 – Ipac offloads NZFM share

IPAC Securities has sold its 50 per cent share of New Zealand Funds Management (NZFM) following a management buyout.

IPAC executive chairman, Arun Abey, says the sale was an amicable deal with NZFM principals, Gerald Siddall and Russell Tills, purchasing the IPAC holding.

IPAC's alliance with NZFM in 1988 was the company's first joint venture outside of Australia but Abey says the two firms have followed different paths.

"Both parties agreed that this was the right time for IPAC to exit. New Zealand Funds Management is well established as a provider of unit trust products and back-office administration," Abey says.

"IPAC is principally a financial planning firm and NZFM didn't fit with our set of skills."

Abey says there is still plenty of growth potential for NZFM but its future direction would be better handled with the skills developed within the New Zealand company.

He says IPAC has no plans to develop a financial planning network in New Zealand as that would "conflict with alliances New Zealand Funds Management has with planners".

The sale also has implications for IPAC Research in New Zealand, which Abey says will be reviewed in the near future.

"We need to develop a strategy for IPAC Research in New Zealand and decide what its function is."

IPAC plan to use the proceeds of the New Zealand sale to further its operations in South Africa, Taiwan and Ireland.

"IPAC is also investigating prospective operations in other parts of Europe and in Japan," Abey says.

"It's encouraging to see that the IPAC model, based on universal principles, is a robust one that is working in different countries."

BT head reshuffle

Craig Stobo will take over as head of BT Funds Management (NZ) at the end of September following the departure of current chief executive, Myles Baron-Hay.

Stobo will continue is his role as BT's chief investment officer while taking on the extra responsibilities of chief executive.

However, BT's head of retail, Mike Newton, has also been promoted to deputy chief executive to assist Stobo with the extra workload.

"We are in the process of reviewing the business but there will be no extra demand on my corporate governance role with the new position and I'm not changing seats," Stobo says.

"No other big changes are on the way and there are no plans for hiring and firing of staff."

Baron-Hay will return to Sydney after the Olympic games to join BT's Institutional Asset Management team as head of institutional business development.

"The company in New Zealand is in a very strong position and I expect the business to thrive under their [Stobo and Newton's] direction," Baron-Hay says.

"BT has consistently been in the top quartile for performance, has had record fund flows at the retail level and is well positioned in the institutional market."

He says his new role will help meet BT's goal "to aggressively grow our institutional business in Australia".

"Although we have a significant presence in that market (being a $20 billion business), BT recognise the need to realign the business to the clients' needs," Baron-Hay says.

He says there is a huge potential for growth in the Australian institutional business for BT, which currently has about 5 per cent of the market.

"My brief is to take the business to the next step," Baron-Hay says.

Super incentive

Employer sponsored super schemes should receive another boost next year when the Government extends a tax break for employer contributions to lower income earners.

Those earning over $60,000 can already avoid the higher income tax rate of 39 per cent by contributing to an employer superannuation fund that is taxed at 33 per cent.

David Carrigan, an adviser to the Finance Minister, Michael Cullen, says the Government is working on ways to extend this incentive to lower income earners.

"The idea is to make the tax incentives for contributions to employer super funds more equitable," Carrigan says.

"We're considering setting the withholding rate for contributions to employer funds to meet an individual's marginal rate."

This change would only be an incentive for those earning under $38,000 as the marginal tax rate between $38,000 and $60,000 is the same as the employer super fund withholding tax rate of 33 per cent.

Carrigan says the option of setting the withholding tax for employer super contributions at 6 cents below a person's marginal rate to match the incentive for high income earners was not considered.

The changes are likely to be included in the March 2001 Tax Bill.

"It couldn't be done straight away as there are some administrative difficulties to overcome," Carrigan says.

Head of the Investment Savings and Insurance Association (ISI), Vance Arkinstall, says the proposals are a small but important gain for the savings industry.

"It's the first time an incentive has been provided for superannuation in an excess of ten years," Arkinstall says.

"Lower income earners need some form of encouragement to save for their retirement and this is a small step on the way."