Financial group buys into Strategic Finance
21 March 2006
Major Australian financial group buys into Strategic Finance
Allco Finance Group Limited (Allco) and Strategic Finance Limited (Strategic) today announced that Sydney based Allco is purchasing a 50% stake in the New Zealand finance company’s parent Strategic Investment Group.
Allco is an Australian investment bank specialising in asset based financing in sectors including aviation, shipping, rail, financial services and property. Allco currently manages assets valued in excess of $A7.6 billion1, housed within a number of listed and unlisted funds.
The deal, which has all necessary regulatory approvals and is being settled today, means the companies will join forces to grow and diversify Strategic’s business in Australia and New Zealand.
David Coe, Chairman of Allco Finance Group, said that Allco invested in Strategic Finance because it recognised the inherent quality and value in the New Zealand company, as well as the potential for growth into the New Zealand market.
“The investment will see Allco’s expertise in asset based financing and funds management adding to Strategic Finance’s already profitable business,” he said. Mr Coe said the rationale behind the co-ownership was to jointly diversify the funding base and develop additional investment opportunities. This is expected to enhance balance sheet efficiency and increase overall earnings.
“We are looking forward to the opportunity to expand our capabilities in property development financing, in line with our growth strategy,” said Mr Coe. The deal gives Strategic Finance the opportunity to participate in structured finance lending and in new areas such as funds management and into other sectors where Allco is a leader.
“This transaction will enable Strategic to leverage off Allco’s proven expertise, achieve growth across diversified asset categories and obtain access to new capital markets,” Strategic Finance Chief Executive Kerry Finnigan said.
Mr Finnigan stressed that business will continue as usual for Strategic Finance’s customers, clients and staff.
“No changes are intended to management or business processes, with existing relationships and obligations of Strategic being unaffected,” he said.
“An important fact is that the remaining 50% shareholding will continue to be held by the existing Strategic shareholders, most of whom are executives. The arrival of Allco will, however, bring tangible benefits to the table,” Mr Finnigan said.
“The companies have a common philosophy of providing the best products and services in their own sectors. Bringing the respective expertise together will create significant opportunities,” Mr Finnigan said.
There will be a minor change to the Strategic Finance board with directors Paul Bublitz and Brent Knight stepping aside on the board to make way for Allco representatives. (See backgrounders for details)
Earlier this month, Strategic Finance continued its record of profit growth by announcing an improved unaudited interim net profit after tax of $12.3m for the six months to December 31, 2005. The six month period saw the company’s largest ever lending period, along with a record inflow boosting its deposit book.
Financial details of the deal will not be disclosed as both companies are privately owned. International credit ratings agency Rapid Ratings Pty Limited, which has rated Strategic Finance Limited as a B1 credit risk, has been made aware of the transaction with Allco Group Ltd. As the transaction has no material effect on the operations or policies of Strategic Finance, Rapid Ratings has confirmed that the investment grade credit rating remains unchanged.