KiwiSaver

Fidelity Life has confirmed that it has done a deal to sell its KiwiSaver business to Grosvenor Financial Services which will also see it take an ownership stake in the company.

Under the deal Grosvernor will assume management of the Fidelity KiwiSaver Scheme and will also work with it on other investment related business.

Currently Grosvenor uses Fidelity as its insurance provider.

Terms of the transaction remain confidential.  However, as part of the deal, Fidelity Life will take a minority shareholding in Grosvenor. 

Once the transaction is complete Grosvenor will manage KiwiSaver assets worth more than $600 million on behalf of nearly 100,000 members.

It will be one of the country’s largest New Zealand-owned and operated KiwiSaver providers – and the seventh largest overall.

“This is about two successful New Zealand owned companies working in a strategic alliance that allows them to focus on what each of them does best,” Grosvenor managing director Allan Yeo says.

“In addition, there is strong synergy between the two companies, both are dedicated and loyal advocates of New Zealand’s thriving independent adviser network.”

“With Grosvenor’s track record and experience in funds management, we believe the combined fund will lead to even more exciting opportunities. We have an unwavering commitment to our advisers and will continue to help members grow their retirement savings through the delivery of effective financial advice,” Yeo says.

“The transaction also puts the combined organisations in a strong position to gain default provider status in the future.”

Fidelity Life chief executive Milton Jennings says the company will continue to work with Grosvenor on investment-related issues while focusing on its core business of providing market-leading risk products.

“This alliance will allow the two companies to share resources – services, products and support – for the benefit of our adviser networks.”

The type, range and costs of funds to existing members will not change as a result of the deal.

A formal agreement between Grosvenor and Fidelity Life is now in place and, subject to usual commercial considerations the transaction is expected to be completed by September 2013.

Grosvenor says it has no comment to make on reports today that it has bought Fidelity Life’s KiwiSaver business.

“You shouldn’t listen to rumours,” a spokesman said.

It has been reported that a deal was done on Tuesday between the two businesses.

Fidelity Life has $244 million in KiwiSaver FUM and bought the Tower life insurance business in May.

It already has links to Grosvenor via TriMax, a life insurance joint venture.

Fidelity Life chief executive Milton Jennings could not be reached for comment.

Many Camelot advisers deal with Grosvenor’s existing KiwiSaver scheme, which has $191 million FUM.

More than 10,000 first-home buyers used their KiwiSaver savings to put down a deposit on a house in the year to March.

That’s about twice the 5737 who did so in the year to March 2012.

The total amount withdrawn from KiwiSaver accounts for first-home deposits was $120.2 million, eight times as much a was withdrawn in 2011.

Housing Minister Nick Smith the scheme was making home ownership more achievable. It reached its sixth anniversary at the weekend.

“My message to young people aspiring to own their own home is that KiwiSaver works. It is a very positive result that to date the initiative has provided $217.6m of people’s own savings and government grants towards the purchase of a first home.”

New rules, from tomorrow, require KiwiSaver providers to use consistent reporting methods to make it easier for savers to compare  schemes and boost investor confidence.

Commerce Minister Craig Foss said: “KiwiSaver schemes will have to report on fund performance, fees, asset allocation and other matters in a simple and standardised form. KiwiSaver providers will also need to publish the information in a consistent dataset that can be easily accessed.”

The first of the new statements will be published in October.

The FMA still isn’t saying which two KiwiSaver schemes were asked to change potentially misleading statements to investors or face court action.

But it has said why.

The first fund reportedly had inappropriate disclosure of past investment performance and asset allocation disclosures contained in advertising material.

The second had inappropriate disclosure of past investment performance and asset allocation disclosures.

Both will change the advertising material.

Rumours have been flying about which two schemes were targeted but so far none have been proved.