Kiwibank IPO likely

Ian Rogers

The talk is germane that an initial public offer may soon be in the works for a 49 per cent stake in Kiwibank.

This New Zealand bank is neither national champion nor banking disruptor, and it was conceived in 2001 as both.

A reluctant NZ Treasury and an equally reluctant finance minister saw to it from early on that Kiwibank would be constrained in its access to capital.

At Interest.co.nz, editor Gareth Vaughan yesterday explored the case for a Kiwibank IPO in detail. He is convincing and will be tapping into contacts telling him a float of 49 per cent of the bank is broadly favoured.

The ACT Party, a member of New Zealand’s still newish – and activist – right of centre government has a Kiwibank listing as policy.

Kiwibank’s manoeuvres to rejig its capital in recent years ultimately led to an unstable share register spread among three NZ government entities. Thus in late 2022, the New Zealand Government purchased Kiwibank's holding company Kiwi Group Holdings for estimated NZ$2.1 billion.

What else can they do but list on the NZX and the ASX to try and grow their capital base?

Heartland Group, a privately-owned NZ banking success story is raising NZ$210 million of capital right now, an issue already well supported.

Kiwibank’s ROE at 7 to 8 per cent is two thirds that of the 12 per cent mean of the four major banks in New Zealand.

Kiwibank will need to leverage up to chase returns, another idea warmly endorsed by Interest.co.nz’s analyst Gareth Vaughan.