New Zealand Invests In Australia Retirement Market For $670M
The strength of the New Zealand dollar against the Australian dollar has helped Infratil and the New Zealand Superannuation Fund to buy RetireAustralia. In the past 18 months, Infratil managing company Morrison and Co. was closely watching the Australian retirement sector for several years, but it was actively evaluating the market in the last five years.
The total price up for consideration was $670 million or AU$640.2 million. Infratil and New Zealand Super provided the AU$429.5 million, while the balance was taken from an existing back debt on the balance sheet of RetireAustralia, the New Zealand Herald reported.
When Infratil and New Zealand Super signed off on the deal, the New Zealand dollar was climbing higher than the weakening Australian dollar. The kiwi soared as high as 95.72 Australian cents, which was also its highest point in December 2005. Economists had raised the possibility that it could soon reach parity with the Australian dollar.
RetireAustralia is owned by Morgan Stanley Real Estate Investing and JP Morgan Global Special Opportunities Group which are both private equity firms. NZ Superannuation and Infratil approached RetireAustralia directly. Infratil Chief Executive Marko Bogoievski said Australia has a more fragmented market with almost the same demographics as New Zealand's.
Bogoeivski said he takes currency into consideration, and by looking at the New Zealand dollar, now would be a good time to make an acquisition in the Australian market. He explained that penetrating the retirement home market in Australia and New Zealand is considered "low" by Western standards. Both Infratil and NZ Superannuation are familiar with the scene for having separate stakes in Metlifecare, a company listed in the New Zealand Stock Exchange, according to RadioNZ.
NZ Superannuation Chief Investment Officer Matt Whineray said the ageing population and low penetration rates will become key drivers in the future growth of RetireAustralia. It is Australia's fourth-biggest retirement home company and the country's largest privately owned operator. Shane Solly, Harbour Asset Management portfolio manager and research analyst, said both Infratil and NZ Super appear to have considered the investment well.