NZX buys QuayStreet, signs agreement with Craigs

NZX buys QuayStreet, signs distribution agreement with Craigs


TRANSACTION HIGHLIGHTS:
• NZX to acquire the management rights of QuayStreet (and its $1.6 billion in funds under
management) from Craigs Investment Partners for upfront consideration of $31.25 million, to be
satisfied by a $22.5 million cash payment and the issuance of $8.75 million of NZX shares (at a
10% premium to the five-day volume-weighted average price).
• Potential earn-out consideration of up to $18.75 million, based on net FUM inflows from the Craigs
network over a three-year period.
• Product support and distribution agreement agreed as part of landmark deal.
• Acquisition expected to have a full year equivalent operating earnings contribution of between $3.3
million to $3.6 million in FY23. This excludes transaction costs, internal and external integration
costs (circa $4 million over two years), depreciation and amortisation, interest expenses and the
impacts of acquisition accounting.
• Builds on Smartshares’ continued organic growth and the prior ASB Superannuation Master Trust
(SMT) acquisition to drive scale and operating leverage in funds management business.
• Enables Craigs, a business with $26 billion of funds under management, to dedicate resource
solely toward delivering exceptional service, and quality investment outcomes for clients.

23 November 2022 – NZX Limited (NZX) today announced an agreement to acquire – through its wholly
owned subsidiary, Smartshares Limited (Smartshares) – the management rights of QuayStreet Asset
Management Limited (QuayStreet) from Craigs Investment Partners (Craigs) for total upfront consideration
of $31.25 million.

In addition, NZX has entered into a product support and distribution agreement with Craigs under which
NZX and Craigs will work together to develop new products for the benefit of Craigs and QuayStreet
customers. In time, NZX also expects to realise further synergies across the Smartshares business as a
result of this transaction.

NZX Chief Executive Mark Peterson says the acquisition of QuayStreet provides an attractive opportunity
for NZX to acquire a high-growth fund – aligned with a powerful private wealth network, driving further scale
for Smartshares.

“Smartshares is a proven funds management business which offers funds to investors that track the
performance of an index or use a systematic approach to investing,” Mr Peterson says.

“Under Smartshares ownership, there will be no immediate change for QuayStreet clients. The QuayStreet
funds will be offered as a premium product set and will complement Smartshares’ existing systematic and
passively managed product offering. In time, Smartshares, with input from Craigs and clients, will work to
align and refine the products to ensure the funds continue to meet customer needs and represent good
value for money. Smartshares will also explore listing the QuayStreet funds.”

Craigs Investment Partners Chief Executive, Simon Tong, says both businesses are delighted to sign the
mutually beneficial agreement.

“Ensuring our clients get the highest quality outcomes is our number one priority. With 19 offices across
New Zealand, and 60,000 clients with $26 billion in funds under management with us, we represent Kiwis
from every walk of life. Our decision to sell QuayStreet is particularly exciting for those clients whose needs

are suited to funds. In Smartshares, they get an award-winning, reputable, focused funds manager and
more choice,” Mr Tong says.

“The deal is also strategically important for Craigs, positioning us for growth as we strive to deliver best in
class, personalised wealth management through our 180 qualified investment advisers. We are working
closely with Smartshares to ensure the transition is seamless and that there is no impact to the service and
advice our clients expect and deserve.”

Auckland-based QuayStreet is an award-winning specialist fund manager with $1.6 billion under
management offering a range of diversified and sector specific funds covering most major asset classes.
Both Smartshares and QuayStreet were award winners at the 2022 Research IP Fund Manager of the Year
Awards on 16 November. Smartshares won the overall Fund Manager of the Year title as well as three
other awards. QuayStreet won Boutique Fund Manager of the Year.
The transaction will see Craigs transition the management of the QuayStreet funds to Smartshares. The
transition is expected to occur in late February 2023 with support services to be transitioned over the
subsequent two-year period. NZX intends to retain the majority of QuayStreet staff as part of the transaction
to continue to support QuayStreet and its clients.

The total transaction consideration comprises:

• A $22.5 million upfront cash payment.

• The issuance of $8.75 million in NZX shares, to be issued at $1.3320, equating to a 10% premium
to last close on 21 November 2022. These shares will be issued ex-2022 Final Dividend and are
subject to staggered escrow for a period of up to four years (and with an early release after three
years subject to NZX share price performance).

• Potential earn-out consideration of up to $18.75 million, based on net FUM inflows from the Craigs
network over a three-year period.

Acquisition expected to have a full-year equivalent operating earnings contribution of between $3.3 million
to $3.6 million in FY23. This excludes transaction costs, internal and external integration costs (circa $4
million over two years), depreciation and amortisation, interest expenses and the impacts of acquisition
accounting).

The financial impact will be included in NZX’s FY2023 operating earnings guidance to be released
alongside the FY2022 financial results in February.

The NZX Board has confirmed the company is maintaining its full year 2022 operating earnings guidance
to be in the range of $33.5 million to $38.0 million.

The acquisition is intended to be funded from cash on hand and new debt facilities with existing lenders.
ENDS
For further information, please contact:

NZX
: Simon Beattie – 021 702 694
Craigs Investment Partners
: Amber McEwen – 021 194 0429

About NZX
For more than 150 years we have been committed to connecting people, businesses and capital. Our
vision is to be a trusted New Zealand business delivering sustainable wealth, value and opportunities for
all.
NZX operates New Zealand's equity, debt, funds, derivatives and energy markets. To support the growth
of our markets, we provide trading, clearing, settlement, depository and data services for our customers.
We also own Smartshares, New Zealand's only issuer of listed Exchange Traded Funds (ETFs), and
KiwiSaver provider SuperLife. NZX Wealth Technologies is a 100%-owned subsidiary delivering rich
online platform functionality to enable New Zealand investment advisors and providers to efficiently
manage, trade and administer their client's assets. Learn more about us at: www.nzx.com
About Smartshares
Smartshares provides financial solutions to more than 119,000 New Zealanders and has more than $8
billion in funds under management (FUM). Customers range from individual investors, businesses, and
iwi to international community groups in the Pacific.
About Craigs Investment Partners
Craigs Investment Partners is one of New Zealand's largest investment advisory firms, offering bespoke
solutions to both private investors and corporate clients. Craigs provide the complete breadth of private
client and investment management services including investment advice and management, securities
trading, research, cash management, institutional dealing, and investment banking.
Craigs has over 180 qualified Investment Advisers, servicing over 60,000 private wealth investors across
19 branches in New Zealand. Craigs have a team of 650 employees, and $26 billion in funds under
management. 100% Owned by Craigs employee shareholders. www.craigsip.com