NZX, through its wholly owned subsidiary Smartshares, has signed an agreement to acquire the management rights of QuayStreet Asset Management from Craigs Investment Partners for NZ$31.25m ($19.59m).
Furthermore, NZX signed a product support and distribution agreement with Craigs.
Under this agreement, NZX and Craigs will work together to develop new products to benefit Craigs and QuayStreet customers.
NZX also expects to achieve further synergies across the Smartshares business following this transaction.
NZX CEO Mark Peterson said that the acquisition of QuayStreet offers it an opportunity to acquire a high-growth fund that is aligned with a private wealth network, thereby boosting further scale for Smartshares.
Peterson added: “Smartshares is a proven funds management business which offers funds to investors that track the performance of an index or use a systematic approach to investing.
“Under Smartshares ownership, there will be no immediate change for QuayStreet clients. The QuayStreet funds will be offered as a premium product set and will complement Smartshares’ existing systematic and passively managed product offering.
“In time, Smartshares, with input from Craigs and clients, will work to align and refine the products to ensure the funds continue to meet customer needs and represent good value for money. Smartshares will also explore listing the QuayStreet funds.”
Craigs Investment Partners CEO Simon Tong said: “Ensuring our clients get the highest quality outcomes is our number one priority. With 19 offices across New Zealand, and 60,000 clients with NZ$26bn ($16.30m) in funds under management with us, we represent Kiwis from every walk of life.
“Our decision to sell QuayStreet is particularly exciting for those clients whose needs are suited to funds. In Smartshares, they get an award-winning, reputable, focused funds manager and more choice.”
“The deal is also strategically important for Craigs, positioning us for growth as we strive to deliver best in class, personalised wealth management through our 180 qualified investment advisers. We are working closely with Smartshares to ensure the transition is seamless and that there is no impact to the service and advice our clients expect and deserve.”
Auckland-based QuayStreet is a specialist fund manager with NZ$1.6bn ($1bn) under management. It provides a range of diversified and sector specific funds covering most major asset classes.
The deal will see Craigs transition the management of the QuayStreet funds to Smartshares.
This transition is expected to happen in late February 2023. The support services will be transitioned over the subsequent two-year period.
NZX plans to retain the majority of QuayStreet staff.
The total deal consideration consists of a NZ$22.5m ($14.10m) in upfront cash payment, and further, an issuance of NZ$8.75m ($5.49m) in NZX shares, to be issued at NZ$1.3320 ($0.84)
The acquisition is intended to be funded from cash on hand and new debt facilities with existing lenders.
This deal also features a potential earn-out consideration of up to NZ$18.75m ($11.75m), based on net FUM inflows from the Craigs network over a three-year period.