When it comes to innovation, banking is probably not the first industry that comes to mind. But leading New Zealand investment banking firm Bancorp is breaking the mould.
Headquartered in Tāmaki Makaurau Auckland since its establishment in 1986, Bancorp began life as a corporate and treasury advisory firm. It was set up to help clients manage fixed income and foreign exchange transactions, which were not as easily transacted then as they are today. Bancorp has continued to grow that business, both in New Zealand and overseas.
As well as investment banking and advisory services – including mergers and acquisitions, debt management and capital structure – Bancorp is one of the largest independent Treasury advisors in Australasia, serving clients from very large businesses to relatively small importers and exporters. “Anyone with foreign exchange, interest rate or cash management exposure,” says Managing Director Craig Brownie.
But Bancorp’s long-term success is also based on its ability to identify new opportunities and respond to the changing needs of its clients. From its Auckland base, Bancorp has succeeded in expanding the breadth of both its offering and its global client base.
Private banking: A holistic offering
When Bancorp started working in Japan in the mid-2000s, the company identified a gap in the market for high-net-worth clients with interests in New Zealand.
“Previously, these clients had to deal with a whole range of different people and organisations,” says Brownie. “For example, if they wanted to purchase property or make investments, both in Auckland or elsewhere in New Zealand, or arrange credit card or banking services here, it involved dealing with a range of different providers.
“In response to that we created a private banking service, which brought everything together into a holistic offering for these clients. We also had Japanese and Chinese staff who could talk to clients in their own language and look after everything in one place. It’s worked well – clients love the service, and they love New Zealand. They have a long-term view and the relationships we’ve built tend to be long-term as well.”
Investment funds: Having skin in the game
Another innovation has been the move into investment funds. Castlerock Partners, backed and managed by Bancorp, is a private equity fund with a difference.
“Through Castlerock, we invest in well-established New Zealand businesses with a strong market position and strong long-term prospects. Unlike many private equity funds, we invest in these businesses for the long-term, aiming to provide investors with regular distributions from company earnings.
“We typically own at least 50 per cent of the businesses and often co-invest alongside the founders, so we maintain their knowledge, passion and experience. It’s essentially a regular income fund backed by private businesses.”
It’s been a very successful formula, delivering a cash return of around 10 per cent on average since inception.
The origin of the fund was an extended period of very low interest rates in New Zealand, which followed the global financial crisis (GFC). “That was an issue for charities and not-for-profits, as it meant they had less money to distribute. But they also needed an investment vehicle that was low risk to safeguard their principal, which had regular valuations and good liquidity to meet the requirements of the governing documents.
“We structured the fund to provide these characteristics, which of course are also attractive to our private clients. So we’ve been able to extend our investment funds and they’re now also a key part of our offering to private clients and high-net-worth investors.”
Locally based, global reach
Bancorp has offices in New Zealand and Australia, with affiliations in Asia, United Kingdom, Europe and North America, but their success is strongly rooted in their identity as a proudly Kiwi company.
“We have a very clear focus,” says Brownie. “We’re not trying to be global providers. We’re New Zealand-centric, we aim to be the best at that, and we believe that’s the best way we can help our clients succeed.
“For our overseas clients, that’s a very attractive proposition. New Zealand has a lot going for it from an investment perspective. It has an efficient tax system, a well-regulated banking system, a high degree of public and private sector transparency, low import tariffs and, importantly, a strong and stable political system. These things are all important. Our historically high interest rates (compared to the rest of the OECD) and lack of a capital gains tax also work in our favour.
“The time zone in Auckland is advantageous too. For example, we’re currently working on a transaction involving New Zealand, Canada and the UK and we can be preparing information and sending it out to everyone first thing in the morning, ready for them to look at during their workday. And although it takes time to fly here, it’s actually easy to get to, with plenty of flights in and out.
“And of course, when people do get here, they love it. They arrive in Auckland, they can see the water, the yachts in the harbour. There’s a lot going on and that all counts to the desirability of investing and visiting here. We find about 90 per cent of our clients have been here and formed an attachment to the place.
“And that’s important, because they’ve already got investments in lots of other places, so why here? The reality is that the decision to invest here can be as much of an emotional decision as a financial one.”
Find out more
To learn more about opportunities in Tāmaki Makaurau Auckland, get in touch with our team of experts.