ANZ announces sale of UDC Finance for $762m

ANZ CEO Antonia Watson
ANZ CEO Antonia Watson said the sale of UDC is part of ANZ's strategy to simplify its business. Photo credit: File.

ANZ Bank has entered into an agreement to sell its asset finance business, UDC Finance, for NZ$762 million.

The purchaser is Shinsei Bank Limited (Shinsei Bank), which under the Shinsei Bank Group, operates asset financing and lending businesses within Japan and offshore.

ANZ said that the deal is subject to regulatory approval, with completion expected in the second half of this year. The sale will release over NZ$2 billion of funding provided by ANZ to UDC, which the bank says will strengthen its balance sheet.

ANZ New Zealand CEO Antonia Watson, said that the sale is in line with ANZ's strategy to simplify it's business and represents a "significant vote of confidence" for the New Zealand economy.

"With a strong outlook for infrastructure and agriculture projects as the New Zealand economy rebuilds post-Covid-19, there is a significant role for UDC to play. 

"As such, it needs an owner that can invest in and grow the business," Watson said.

The bank said that Shinsei's purchase price represents a price-to-book ratio of 1.2x net tangible assets of $637 million as at March 31. Under Shinsei Bank's ownership, it expects the UDC brand and it's employees to stay the same.

"Shinsei Bank intends to preserve UDC's operations, retain UDC employees and provide long term capital to maintain and grow customer lending in New Zealand. 

"The sale will also mean UDC will continue to operate as an independent finance company and enhance competition in the asset finance market," Watson said.

Shinsei Bank CEO Hideyuki Kudo, said that under the new normal of COVID-19, he expects UDC to continue to grow and contribute to the New Zealand economy.

"Based on UDC's long successful history, solid business base and efficient sales structure, UDC will be a major asset for the Shinsei Bank Group," Kudo said.

ANZ has sought to sell asset financier UDC for several years. In its annual results announcement on October 31, ANZ NZ said it was again "exploring a range of strategic options", including divestment, for UDC.

In January 2018, ANZ confirmed that a deal to sell UDC to Chinese conglomerate HNA Group wouldn't go ahead. The sale was rejected by the Overseas Investment Office amidst reports that information about the relevant overseas person intending to make the purchase, was unclear. 

Financial Services Limited - later UDC Finance - was first formed in 1937, when it provided industrial finance to New Zealand businesses. In 1980, the company became a wholly owned subsidiary of ANZ Bank New Zealand Limited.

The sale is expected to be finalised in the second half of 2020.