ANZ sells UDC Finance to China's HNA Group for $660 million

UDC Finance chief executive Wayne Percival

ANZ Bank New Zealand has sold UDC Finance to HNA Group for $660 million, marking the Chinese company's first foray into New Zealand.

The deal is subject to various approvals and is expected to be completed late in the second half of the year, and will deliver a net gain to ANZ of A$100 million, the lender said in a statement. The sale price is $235 million above UDC's net assets, or a price-to-book ratio of 1.6 times.

"The sale of UDC is consistent with our strategy to simplify the bank and is a good outcome for customers and staff," ANZ New Zealand chief executive David Hisco said in a statement. "HNA is well placed to invest in specialist asset finance products and systems which will help UDC expand further in the future."

The finance company's ownership has been up in the air for almost a year, attracting suitors including NZX-listed Heartland Bank, though HNA emerged as the front-runner in December. ANZ's review of the ownership triggered Standard & Poor's to downgrade UDC's credit rating to A- from AA- and that question mark made it more difficult for the finance company to attract debenture funding.

Hainan, China-based HNA, which evolved from a regional airline to a global conglomerate with more than US$90 billion of assets, plans to preserve UDC's existing operations, keeping all staff and customers.

HNA vice chairman and chief executive Adam Tan said the Auckland-based non-deposit taker provides "significant growth opportunities in Australasia and supports HNA Group's disciplined approach to our core tourism, logistics and financial services businesses."

UDC holds the highest credit rating among its deposit-taking peers, with Liberty the only other NBDT with an investment grade rating at BBB. UDC is currently offering 3.6 percent for a 12-month term deposit, sitting in the middle of the pack among other finance companies. However, longer duration terms are largely lower than UDC's peers.

The lender's debenture funding shrank to $1.59 billion as at Sept. 30 from $1.74 billion a year earlier, reducing its share of deposits among finance companies to 57 percent from 61 percent a year earlier. At the same time, UDC's loan book expanded 9.6 percent to $2.57 billion, helping generate a record profit of $58.3 million.

(BusinessDesk)


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Dumb move by ANZ

For the sake of a $100M net gain but loss of an iconic NZ asset lender. The other Banks like ASB, Heartland and BNZ will be salivating with the opportunity to take business off UDC with it's new owners and also many depositors will switch back to the Banks. Many investors in UDC are there because of the backing of ANZ Bank - they don't know HNA or have a feeling for their longevity and rating etc

ANZ has just given free runs to it's competitors who will cherry pick the good UDC customers

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Had always liked UDC, however this move now makes the likes of Heartland Bank more attractive for both investors and borrowers in my humble opinion.

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What's "iconic" about UDC? It's just another Finance Company for heaven's sake. I really get pissed off by people who misuse and overuse words like iconic and awesome.

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For me they were awesome to deal with in financing plant and in my view are well qualified to be classed as iconic.
Maybe you are a person easily pissed of?
I am sure the likes of Heartland will reap some real benefits from the sale
The question in my mind is the quantum?

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Where were you the last 25 or more years

UDC has supported the SME and resources sectors fro many years - in good and bad times - companies have prpospered via their support
Leading up to the GFC people werev criticising UDC for not growing a sfast as the other finance companies like Hanover and GE etc. UDC could see that the markets were out of kilter and would not lend to clients unless the deals were prudent - so they did their clients a favour.

Post GFC the other finance companies failed and GE retracted back to the USA and left all of their clients in the lurch - basically gave them a few months to refinance or repay.

So that is iconic - the word isn't used lightly
Not sure of your age or life expereince but it sounds like you have only just come out of nappies or graduated and have no life experience maybe

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Actually I am in my 81st year and I am generally regarded as having a good command of the English language. I would not normally use a phrase like "pissed off" either written or verbal, but it seemed to fit the occasion. And yes, I do accept that the meaning or use of words changes over time, even though the OED might be a bit slow in catching up, but I still believe iconic is not the right description of UDC. And, Scribe, I am not having a go at you here, but I wish more correspondents would use their spell check.

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You are right, the fact that UDC was a subsidary of ANZ, therefore it was ANZ seems to have escaped the attention of some people.
Now China own it.
No biggie, I do not think it would be overly presumptious to assume that ANZ was happy with the sell price and the Chinese buyers were happy with the buy price?? No news here?

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And Heartland misses out. They were never in the game. Will be really interesting to watch the deposit book from here.

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Growth earnings and savings and cheeque accounts

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Will the new owners still raise money in NZ or will it be financed from their own resources?

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It is probable that the new owners will raise money from China as it be viewed as a higher risk by NZ investors. This may, however, reduce the viability of UDC if the Chinese debt market continues to worsen.

It will be interesting to see if there will be a restraint of trade imposed on the ANZ as part of the sale.

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Hope the new owners are more successful than CITIC with its part-purchase of Forestry Corporation. That was a financial disaster.

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