Normal 0 false false false MicrosoftInternetExplorer4 Heartland New Zealand announced a deal to buy Australasian reverse mortgage specialist Australian Seniors Finance for NZ$87 million in cash and shares from Quadrant Private Equity and other investors.

The listed regional bank said it aimed to take advantage of expected growth in demand for finance from those aged over 65 who were asset rich but income poor and wanting to withdraw equity from their homes without having to leave them.

The deal to buy Seniors Money International includes both its Australian Seniors Finance and Sentinel operations in New Zealand, which have a combined NZ$760 million of mortgages.

Growth of home equity release mortgages slowed dramatically after the onset of the Global Financial Crisis dried up the securitised funding used by such reverse mortgage providers.

Heartland Managing Director Jeff Greenslade said it was the a lack of supply of finance that held back the Australasian home equity release markets since 2008, rather than a lack of demand. 

Heartland said Australian Seniors Finance was the largest non-bank provider of home equity release mortgages in Australia with a 20 per cent market share, while Sentinel has an 80 per cent market share in New Zealand.

The New Zealand bank, formed in 2011 from the merger of Marac Finance, PGG Wrightson Finance, CBS Canterbury and Southern Cross, has concentrated on rural, provincial and business asset financing, choosing not to take on the bigger banks head-on in mortgage or corporate lending.

Greenslade said the bigger banks had not focussed on the home equity release market because it was more complex and time consuming. "It takes six weeks rather than six hours to approve this type of loan," he said.

Australian Seniors would continue to operate as a stand-alone entity in Australia and retain its Commonwealth Bank of Australia funding facility, while Sentinel would be absorbed into Heartland New Zealand.

Heartland said it planned to raise NZ$20 million in fresh equity to partially fund the NZ$48.3 million cash component of the acquisition, with the remainder being new Heartland shares issued at 90 cents a share each. The deal leaves Quadrant and other minority Seniors Money investors with a 9 per cent stake in Heartland. st1:*{behavior:url(#ieooui) } /* Style Definitions */ table.MsoNormalTable {mso-style-name:"Table Normal"; mso-tstyle-rowband-size:0; mso-tstyle-colband-size:0; mso-style-noshow:yes; mso-style-parent:""; mso-padding-alt:0in 5.4pt 0in 5.4pt; mso-para-margin:0in; mso-para-margin-bottom:.0001pt; mso-pagination:widow-orphan; font-size:10.0pt; font-family:"Times New Roman"; mso-ansi-language:#0400; mso-fareast-language:#0400; mso-bidi-language:#0400;}