Jarden-JBWere wealth merger inches closer

Jarden is working on creating a wealth management powerhouse worth $NZ700m.

Jarden’s bankers may be busy defending Origin Energy from the fierce $16bn battle playing out for control by Brookfield and EIG.

But behind the scenes, there’s still plenty of work happening on its other big project – a $NZ700m merger of its wealth unit with the JBWere New Zealand operations, owned by the Australian-listed top four bank NAB.

The talk in the market is that the deal will likely happen around December 14, with former Blackstone executive Malcolm Jackson to run the new unit.

As earlier reported by DataRoom, the transaction will see Pacific Equity Partners own about 30 to 35 per cent of the new entity and Jarden receive about $NZ60m that which help to pay down debt.

But one point of contention is believed to be the business model.

PEP hopes to profit through earnings upside generated from the cross selling to clients, including banking products from the NAB-owned New Zealand subsidiary BNZ, BNZ’s KiwiSaver scheme and Jarden’s Harbour Asset Management.

It’s not quite clear how that will go down with Jarden and JBWere’s high net worth customers or the advisers involved.

The understanding is that moves are afoot to sign up as many advisers as possible to work at the new venture by the time the deal is completed next month.

Meanwhile, Jarden stands to make about $10m in fees as Origin Energy’s defence adviser if Brookfield and EIG’s $9.43-per-share offer for the business is successful.

At this stage, AustralianSuper’s dominance with a 17.5 per cent position and strong opposition to the plan makes it doubtful at best, as 75 per cent of shareholders is needed in favour of the transaction at the vote next Monday.

It could mean the merger deal that offers a payday for Jarden couldn’t come soon enough as tough conditions and limited investment banking activity hits advisers across the board.

As earlier reported by DataRoom, the understanding is that the Jarden wealth merger deal involves NAB selling New Zealand’s JBWere operation into a vehicle and its existing BNZ KiwiSaver retirement product business.

JBWere will own about 48 per cent of the vehicle and Jarden, which also has the Harbour Asset Management institutional funds management business, about 20 per cent along with shareholders including its wealth managers.

PEP would own the remainder.

Both Jarden wealth and JBWere are believed to be valued at about $NZ250m and KiwiSaver about $NZ150m.

Jarden’s investment banking business would be a stand-alone unit after it was structurally separated from the remainder of the company last year in preparation for a deal.

JBWere, previously part of Goldman Sachs, is considered the jewel in the crown for NAB’s operation in New Zealand.

It is estimated to be earning about $NZ30m of annual earnings before interest, tax, depreciation and amortisation.

Jarden’s wealth management unit is also lucrative and successful with about $NZ18bn of funds under management, generating about $NZ20m of annual EBITDA.

Spearheaded by top investment banking names Aidan Allen (ex UBS investment banking head) and Sarah Rennie (the former head of equity capital markets at Goldman Sachs), Jarden has landed itself on some big-ticket transactions since it first forged its way into the Australian investment banking market amid the global pandemic in 2020 with about 160 staff, expanding from being just a New Zealand advisory firm in what has been a decade-long ambition.

Internally, Jarden announced $143m in revenue for the half year and group EBITDA of $6.6m for the period.