WELLINGTON, July 24: New Zealand's largest investment firm, Brierley Investments Ltd(BIL), is to trim back its portfolio and narrow its country targets away from Asia and towards Australia, Britain and New Zealand, BIL said on Friday.
Brierley's investments include stakes in airline Air NewZealand, Australian newspaper publisher John Fairfax and almost half of listed British hotelier Thistle Hotels Ltd. Its group market capitalisation of about NZ$2.85 billion (US$1.48 billion) makes it one of New Zealand's top 10 firms.
Chairman Sir Roger Douglas on Friday outlined a radical reshaping of the group after the board had considered a full strategic review earlier this week. "The new BIL will have a lower gearing, will invest only where it has a defined competitive advantage and will place a strong emphasis on developing the analytical skills of the management structure to ensure that investments chosen will satisfy the requirements of superior returns," Douglas said.
Douglas called the review a "majorturning point" for the group, adding it would bring discipline back to a company which had lost its way in many shareholders' and analysts' eyes. BIL planned to remain an active investor, he said, seeking big enough stakes in target companies for board representation.
It intended to detail the full impact of the new tactics on its investment portfolio in September, but executives said one immediate effect would likely be felt in Asia where BIL would seek to exit property, construction and power project interests.
Finance director Herman Rockefeller said BIL expected to sell its stake in Thistle, worth about NZ$2 billion, during the coming months as talks with several buyers were set to lead to an announcement in August. BIL is about half way through realising NZ$650 million of assets it aims to have liquidated by the year-end.
As for future investment strategy, Douglas said "BIL will target investments in the NZ$100 to NZ$600 million range and a planned investment timeframe of three to five years".
Headded the company expected to limit its portfolio to approximately eight to 15 investments. What this means is that, in addition to getting out of Thistle -- long a millstone for the company and one of the reasons it was forced into this review in the first place -- it will have taken a hard look at some of its other interests. Douglas told a media presentation that one interest which looked to have good potential for added value if retained was Fairfax, in which BIL had a stake of 23.6 per cent.
That investment fits the new criteria in several ways, being Australian, within the value range (at a June 1997 book value of NZ$583 million), and Brierley having ensured it is strongly represented on its board after a recent Fairfax shake-up.
Douglas said he believed the company could also add further value at Air New Zealand, although its substantial stake of 42 percent in the airline made it one of the largest investments in the Brierley portfolio, once Thistle was excluded.
In Australia, BIL also has a 28per cent stake in building products group James Hardie Industries, from which it is set to gain up to NZ$100 million in one-off special dividend income when a recapitalisation of one of its units is completed -- due in September. Also in the building products sector is a 29.9 per cent stake in British brickmaker Ibstock, whose future is not clear.
BIL currently has no board presence in Ibstock.
Douglas told reporters he felt BIL's British investments would fall to a "more natural level" if it successfully sold out of Thistle.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.