Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 


Heartland to buy ‘home equity release’ business for $87M

Heartland to buy ‘home equity release’ business for $87M, to raise $20M from shareholders

Feb 14 (BusinessDesk) – Heartland New Zealand, which gained a banking licence just over a year ago, has agreed to buy a ‘home equity release’ mortgage business from buyout firm Quadrant Private Equity for $87 million in cash and shares and plans to raise $20 million of that from shareholders.

Home equity release (HER) products target the elderly, allowing them to draw against the equity in their home. Similar products have been called reverse mortgages and deferred settlement schemes. Typically, the borrower doesn’t pay interest and the mortgage is settled when they vacate.

Heartland has signed an agreement with Seniors Money International, majority-owned by Quadrant, to buy its HER businesses in Australia and New Zealand. The sale is conditional and would be settled on April 1.

The acquisition “provides Heartland with the product capability to meet the needs of the 65-plus demographic, which is a growing demographic and is typified by those with the majority of their personal wealth tied up in their primary residential dwelling,” the bank said in a statement.

Under the deal, Heartland would acquire Sentinel New Zealand, the nation’s biggest HER mortgage provider with about 4,050 loans, and Australian Seniors Finance, which has 20 percent of that market and 4,250 loans. The aggregate value is about $760 million including $30.5 million of HER loans bought by Heartland last December.

The acquisition will be funded with $48.3 million of cash, made up of the capital raising and existing cash on the balance sheet, and by the issue of $38.7 million of shares at 90 cents apiece, it said.

The capital raising is by way of a $15 million placement and $5 million share purchase plan and the company said it has commitments from new and existing investors for the placement, which would be at 88 cents a share. The shares last traded at 90 cents, up 1.1 percent on the day, having been halted for the announcement.

Heartland said HER loans are “an ideal response to demographic and economic realities – an aging population with much of its wealth invested in real estate.”

The acquisition is expected to add $8 million to $9 million to profit in the first full year following integration, with profit in 2015 of $42 million to $44 million, including costs associated with the purchase and integration of the businesses.

The company is scheduled to release its first-half results on Feb. 25 and said today it would be a profit of about $16.5 million, putting Heartland on track to meet its full-year forecast of $34 million to $37 million.

(BusinessDesk)

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Wine: 20% Of Marlborough Storage Tanks Damaged By Quake

An estimated 20 percent of wine storage tanks in the Marlborough region, the country’s largest wine producing area, have been damaged by the impact of the recent Kaikoura earthquake. More>>

ALSO:

ACC: Levy Recommendations For 2017 – 2019 Period

• For car owners, a 13% reduction in the average Motor Vehicle levy • For businesses, a 10% reduction in the average Work levy, and changes to workplace safety incentive products • For employees, due to an increase in claims volumes and costs, a 3% increase in the Earners’ levy. More>>

Women's Affairs: Government Accepts Recommendations On Pay Equity

The Government will update the Equal Pay Act and amend the Employment Relations Act to implement recommendations of the Joint Working Group on Pay Equity. More>>

ALSO:

Immigration: Increase In Seasonal Workers For RSE

The current cap will be increased by 1,000 from 9,500 to 10,500 RSE workers for the 2016-17 season. Mr Woodhouse says the horticulture and viticulture industry is New Zealand’s fourth largest export industry, producing almost $5 billion in exports. More>>

ALSO:

Hurunui: Crown Irrigation Invests Up To $3.4m In North Canterbury

Crown Irrigation Investments will invest up to $3.4m in the Hurunui Water Project, an irrigation scheme that will be capable of irrigating up to 21,000 hectares on the south side of the Hurunui River in North Canterbury. More>>

ALSO:

Not So Great:Butterfly Eradication Success

The invasive pest great white butterfly has been eradicated from New Zealand in a world-first achievement, Primary Industries Minister Nathan Guy and Conservation Minister Maggie Barry say. More>>

Gordon Campbell: On The Government’s Tax Cuts Fixation

Long before the earthquake hit, the dodginess of the government tax cuts programnme was evident in the language of its packaging. It is being touted as a “tax cuts and family care” package... More>>

ALSO:

Get More From Scoop

 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news