Fletcher Building puts residential arm on the block to simplify portfolio
The $3.3bn Australia and New Zealand building materials provider Fletcher Building has sent out sale documents to prospective buyers for a sale of its residential development business, say sources.
Working on the sale is investment bank Jarden and first-round offers are due before Christmas.
Parties approached are likely to be similar groups that considered a purchase of the Lendlease residential communities business, sold to Stockland in 2024 for about $1bn.
Groups such as Singapore sovereign wealth fund GIC, Thai investor Supalai, Japan’s Daiwa House, Lendlease, Blackstone and Invesco have likely been sent an information memorandum.
Fletcher Building had previously confirmed a strategic review of its residential and development unit was underway, as it also reviewed sale options for its construction arm.
Earlier, sources believed a capital partnership or joint venture for its development land could net Fletcher Building about $500m.
While Fletcher Building primarily operates in the building materials market in Australia, selling products such as Laminex surfaces, Iplex piping systems and Stramit roofing, in New Zealand it operates as a residential developer as well as a building supplies company.
The move to place the business on the market comes with calls by investors and analysts by Fletchers to simplify the business after it swung to a $NZ419m ($364m) loss for the 2025 financial year.
Analysts had earlier valued its New Zealand development land bank at about $NZ1bn.
A sale would further reduce the group’s $NZ999m of net debt, which was down from $NZ1.77bn in June 2024, after the group carried out an emergency $642m equity raising late last year.
Some suitors may sit on the sidelines to wait out the recession across the Tasman, where high unemployment and a net migration loss are having an impact. Residential prices in the two largest cities, Auckland and Wellington, are down about 25 per cent from their peak.
Construction unit sale plans have been slow going for Fletcher Building.
The group placed the unit, which includes civil construction business Higgins, on the market earlier this year through Jefferies.
Among the suitors that have been engaged are believed to be Acciona and Malaysia’s Gamuda.
Last year, Fletcher Building sold its plumbing supplies business Tradelink to Metal Manufactures for $170m through Miles Advisory.
Fletchers said in its full-year results in August that the asset sales were designed to simplify its portfolio, sharpen its operational focus and unlock value for shareholders.
“While there is no certainty that they will result in transactions, any potential cashflow and cost-out benefits were expected to begin flowing through from the 2027 financial year, further strengthening its position for long-term growth,” the company said.
Hurting Fletcher Building has been provisions made on the New Zealand International Convention Centre, which has now been finalised; the Wellington International Airport carpark; and its Iplex business, which is subject to legal proceedings over pipe leaks in the Western Australia market.
A $155m provision on the Australian Iplex business is net of a $30m contribution from the Western Australia government.
Iplex Australia faces a class action and proceedings from BGC.
Fletcher Building’s share price is up 15.6 per cent this year.
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