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Dow Jones Newswires: New Zealand government to take direct ownership of Kiwibank after rejecting private investment

WELLINGTON, New Zealand — The New Zealand government will take direct ownership of Kiwibank in a deal valuing the lender at 2.1 billion New Zealand dollars ($1.3 billion), after rejecting private investment for the company.

Kiwibank’s ownership was divided between state-owned New Zealand Post Ltd. and two government investment funds. The government had a first right of refusal of any sale of shares in Kiwibank. The bank, set up by the New Zealand government in 2002, has a small share of the country’s largely Australian-owned banking industry.

NZ Super Fund, which owned 25% of Kiwibank, said on Monday that it had wanted to buy NZ Post’s majority stake in the lender, but couldn’t get government agreement for the ability to introduce private capital and governance. The sovereign wealth fund had also wanted a full range of commercial options for any future sale of its stake. NZ Super Fund will receive NZ$527 million for its one-quarter shareholding.

A government statement said the deal doesn’t result in any change to the state’s balance sheet as it’s a transfer of assets between government entities. Central bank approval is required for the deal to go ahead.

“The government is fully committed to supporting Kiwibank to be a genuine competitor in the banking industry,” Finance Minister Grant Robertson said in a statement.

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