NZ's Heartland eyes Avenue Bank takeover
New Zealand’s Heartland Group Holdings, the parent company of Heartland Bank, is looking to acquire Australia’s Avenue Hold and its neobank subsidiary Avenue Bank for around A$49 million.
Announcing its financial results for the 2022 financial year on Tuesday, Heartland said the two groups had entered into a non-binding memorandum of understanding and as a result, Heartland had made an initial subscription for A$5 million of capital in Avenue Hold.
Heartland said its due diligence review was continuing, as were negotiations of binding transaction documentation.
Heartland finalised its purchase of Brisbane-based StockCo Australia in May this year and plans to position it as a market-leading provider of specialist livestock finance for cattle and sheep farmers across Australia.
It also bought Australian Seniors Finance, a specialist provider of reverse mortgages, in April 2014 and renamed it Heartland Seniors Finance.
But on Tuesday, Heartland said it had continued to look for further opportunities in Australia, including opportunities to establish or acquire an authorised deposit-taking institution (ADI) in Australia.
Avenue Bank was granted a restricted ADI by the Australian Prudential Regulation Authority in September last year. This means it may conduct banking business in Australia for a limited period, subject to specific restrictions. But Heartland said Avenue Bank was looking to become a full ADI.
Avenue was founded with the aim to provide cash-flow finance to the traditionally underserviced SME banking sector, with 48-hour pre-approvals.
It is the brainchild of entrepreneurs, Colin Porter and Dale Hurley, who founded CreditorWatch, a credit reporting bureau that disrupted a $4 billion duopoly held by Equifax and Illion. And, its CEO is George Confos, who was previously executive general manager of client solutions at CBA. Liberty Financial Group is a major backer.
Subject to regulatory approvals and if the deal does get completed, Heartland said its existing businesses in Australia would be transferred to sit in or under Avenue Bank, and this would be the vehicle for its growth in Australia.
Completion of any transaction was expected to be conditional on a range of matters, including regulatory approval and Avenue Bank gaining a full ADI.
If the deal went ahead, it was expected to be finalised no earlier than the last quarter of the 2023 financial year and possibly not until the first half of the 2024 financial year.