Butler family to list its finance company

By Graeme Kennedy

Friday 11th June 2004

Remuera couple Terry and Ann Butler's closest friends gave them no more than six months when they began working together to build Dominion Finance Holdings into a strong family company.

But after 14 years of business partnership, they were this week expecting to gain $10 million from the $15 million initial public offering of their venture, the first pure finance company listing on the market for almost 12 years.

Dominion managing director Butler said the move toward a listing was a strategy for growth rather than exit.

"We own all the shares and will sell 28% of the company," he said. "The market requires that we have no more than 80% but that would not give us the required liquidity in the shares to attract investment and stimulate trading.

"The last thing we want is to list and have them not being traded, people buying them to put in a bottom drawer as an investment because of the very good forecast dividend yield of 8.16%."

Butler said he and his executive director wife would own 40 million shares and the public 15 million while 500,000 would go to staff. Dominion has $112 million in receivables and $92 million in debenture stock.

The Butlers transformed the business from one based on contributory mortgages to an investment bank, providing short-term funding for business loans, working capital and residential and commercial property ownership and development. It operates in a wide range of sectors including viticulture, tourism, health, farming and retail.

"We have built the company up and we are very proud of it," he said. "Dominion has always had measured growth never the huge ups but nice and steady and we had a look at where we wanted to go next.

"A lot of people have wanted to buy us over the years and as a family company we have always said no. We have always had loyal investors and we have done so well it came time to ask: where to now?"

Butler said listing would also provide transparency, something which many felt was lacking in the finance industry. "We are very clean but we are saying to the public come and look at us. "We are willing to show that we have no hidden agendas.

"Some businesses have used public money to further their inter-company borrowings and while I don't necessarily see this as a bad thing, there should be greater public disclosure.

"Reporting and governance as demanded by listing was a consideration for us."

The company began in Christ-church half a century ago as Canterbury Advances, part of the Dominion Finance Group which merged with Broadlands Group in the 1960s.

Butler joined Broadlands Dominion Group in 1973 as Wellington credit manager and three years later transferred to Auckland in charge of the company's extensive motor vehicle financing division.

Canterbury Advances became Dominion Mortgage Services, dealing only in contributory mortgages, before Fletcher Challenge acquired BDG in 1981 but began selling its subsidiaries.

"I had got to know Dominion Mortgage very well and bought the company in 1987 a week before the stock market crash," Butler said.

"It was a very clean company handling around $3 million to $4 million at that stage and had no history of defaults, no losses.

"I had been in finance all my life and saw it as a good opportunity to pick up a really good company and expand it."

Butler joined Guardian Royal Exchange's finance company MoneyMark Corp as general manager in 1989.

"I was determined to turn Dominion around, get out of contributory mortgages and create a general finance company, so I bought Moneymark's investor base and doubled our size to around $6 million that's when Ann and I started working together to build the family firm."

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