Thursday 8th February 2018
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Sterling Grace (NZ) bought out the minority shareholders of Trustees Executors for $4.9 million, valuing the local supervisory firm at $94.4 million, almost four times what the New York-based financial services investor paid in 2003.
Accounts for Sterling Grace show the investment vehicle of the Grace family bought out minority shareholders owning 5.2 percent of Trustees Executors in the September 2017 financial year, a period when the supervisory firm paid a $15.9 million dividend. Sterling Grace bought the trustee business, then called Tower Trust, from Tower in 2003 for $25 million.
Trustees Executors reported a profit of $9 million in the year ended Sept. 30, more than twice the $4.1 million a year earlier which was weighted down by a $4.9 million settlement with the Inland Revenue Department over an audit of the 2013 tax year and treatment of a $24 million legal settlement. Pretax profit was largely unchanged at $12.5 million with a 3.1 percent increase in commission and fee revenue to $39.1 million offset by higher administration fees and increased amortisation costs.
The trustee firm, one of five licensed supervisors, administers and supervises more than $122 billion of client funds across 810,000 individual accounts. Chief executive Rob Russell declined to comment.
Trustee Executors has tested the waters for a sale in recent years, with reports in 2015 it had three Australian suitors and could fetch up to $150 million. More recently, rival Complectus, which operates the Perpetual Guardian supervisory business, was in play last year with a trade sale falling through after the buyer didn't meet the agreed settlement date.
Complectus had considered an initial public offering in 2016 scotched citing market volatility and has since entered into a convertible loan facility with private equity firm Direct Capital, which can convert into 50 percent of Complectus's ordinary shares at the discretion of the lender.
Sterling Grace's accounts, which incorporate the Trustees Executors financials, show a profit of $9.1 million in the September 2017 year, up from $4 million a year earlier. The Sterling Grace unit paid dividends of $18 million in 2017.
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