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Tower suggests selling state assets to Kiwisaver funds

Fuseworks Media
Fuseworks Media

Wellington, June 1 NZPA - The Government's proposal to sell off stakes in state assets could be implemented by selling shares to Kiwisaver funds, says the head of a big investment company.

"Kiwis should get an exclusive right to own the initial stakes being sold in state assets, either by buying shares direct or via their Kiwisaver schemes buying stakes," said Tower Investments chief executive Sam Stubbs.

He said having Kiwisaver funds invest in state assets would avoid issues such as foreign ownership of sensitive or strategic assets.

"Given Prime Minister John Key's stated preference for mums and dads to invest in state assets, it is noteworthy that only New Zealanders can belong to KiwiSaver schemes," Mr Stubbs said today.

Mr Key last week said work will begin soon on assessing which state assets may be put up for sale after the next general election.

Finance Minister Bill English had previously revived speculation about the possibility of a partial float of Kiwibank to raise capital.

The Government has had discussions with the board of Kiwibank's parent company, New Zealand Post, about a capital injection to expand the bank, but Mr Key said any part-sale of Kiwibank would be a public float and not a trade sale.

Labour Party state-owned enterprises spokesman Clayton Cosgrove has said that the nation's mums and dads already own Kiwibank "through something called taxation", and the reality was it would not be these people who would buy shares in any float.

But Mr Stubbs said KiwiSaver schemes could be natural investors in state assets because they have long-term investment horizons that match the long-term capital requirements of state-owned enterprises and Crown entities.

"Capital raising needed for the 18 state-owned enterprises and 72 Crown entities on the Government's books could be made much more efficient if KiwiSaver schemes were enabled to channel household savings into investing in them," he said.

Private sector investment in state assets would raise critical issues such as governance and who would represent ordinary householders at board level when they invested.

But if the investmetns were done through Kiwisaver schemes invest, directors could be appointed to represent the best interests of Kiwisaver members.

"Listing of state asset shares on the NZX would go a long way to increasing the size and depth of our capital markets and open up more investment opportunities for Kiwisaver schemes within the New Zealand economy," said Mr Stubbs.

"Many state assets would easily become NZX Top 50 companies and that would put them on the 'must buy' list for Kiwisaver fund managers".

Tower, an insurer and fund manager, will next month pay its first interim dividend in eight years -- 4c a share, after recording a net profit of $28.1 million for the six months to March 31, up $1.5 million or 5.6 percent on the same half last year.

Tower now has 82,000 members in its Kiwisaver scheme and just over $402.4 million in funds under management at March - 8 percent of the industry total. It is the sixth largest Kiwisaver provider and fifth largest among default schemes.

Tower's Kiwisaver investors have an average of $4900 invested, compared with a market average of $3700.

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