Hanover quits bond company

By Chris Hutching

Friday 28th May 2004

The founders of a company called New Zealand Home Bonds that provides deposits on property investments have restructured the company and introduced new shareholders.

Home Bonds is mainly aimed at apartment and residential investors but it does have a list of small commercial developers and investors it works with. Its main competitor is Auckland-based Deposit Bond, which recently announced it would be opening up its products to commercial property investors and developers.

The founding shareholders of New Zealand Home Bonds, Peter Rudkin and Simon Lindsay, have bought out the 75% shareholding in the company held by Hanover Financial Services and Strategic Finance.

They are keeping half the shares in the company but have recapitalised by selling the other half to Christchurch-based investors.

One of the new investors, Murray Blackmore, has joined the board. Blackmore has previously been involved in bank lending and is a middleman in various property deals in Christchurch.

Bonds provided by the company are underwritten by Lumley General Insurance ( NZ ). The Lumley underwrite enhances bank acceptance of the company's bonds when those deposits are needed to support the developer's construction finance, a spokesman said.

The company's core business is assisting apartment buyers buy off the plans by providing bonds to cover their deposit obligations.

The cost varies. Sometimes it is picked up by the developer, so that investors pay no money out of their own pocket (although incorporated into the final settlement cost).

A buyer could expect to pay 3% of the cost of a full cash bond in the first month and 9.5% thereafter or they have the choice of capitalising the cost until final payment. The money is secured against fixed assets such as a home or business (it is not a first-home buyers' product).

Hanover says the relatively short-term nature of the deposit facilities is not a core business direction.

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