Chris Lee & Partners Ltd

Taking Stock 14 May 2026

INVESTORS are again being wooed by the potential of an NZX listing for the state-owned bank, Kiwibank. A listing could occur within a year.

Finance minister Nicola Willis has instructed Treasury to assess the options for the bank, ostensibly to enable it to grow and take market share from the Australian banks.

The more pressing motive is to raise a billion or two of capital for the Crown, enabling it to reduce national debt and offset some of the rising cost of servicing debt. 

Willis is well aware that wide public acceptance of selling off some of an asset that the media and the left regard as sacred is the commercially logical response to our horrific debt level.

Set up to be “the people’s bank” by long-time left-wing politician, the late Jim Anderton, Kiwibank has morphed from a low-cost bank for social welfare beneficiaries into a fledgling commercial bank with a significant mortgage-lending portfolio, pricing its services at or around the same levels as its Australian competition.

The “people’s bank” for a while was TSB. In 2026 this title, if it is allocated at all, is more likely to be the tiny Co-operative Bank.

Willis will know that NZX is keen to host credible new listings, just as Key was aware of that when he campaigned on selling down to 51% the Crown’s holdings of the power companies, Genesis, Mighty River (now Mercury) and Meridian.

Hopefully Willis will have learnt from Key’s errors and will not replicate them.

If she sells some (or all) of Kiwibank, hopefully Willis will not allow the lead brokers to feed the stock to institutions with no rules on their exploiting the market.

In the first Key-authorised sale, Goldman Sachs was appointed a co-lead with no constraints. It allocated large sums to local and global institutions, forcing hefty scaling on those of the public who were in a position to take up a shareholding.

These institutions were aware that Genesis and Meridian were in line for sale so bought up large, but in the days after listing sold the shares for an immediate profit, gaining some handy trades (and more brokerage) for the broker.

That led to the Mighty River price collapsing by 20%, where it sat for many months.

While this was an opportunity for retail investors to buy cheaply, the reality was that many were squirreling money for the Genesis and Meridian offers.

The result was a depressed Mighty River price, which in turn led to sharp reductions in the value of Genesis and Meridian, unarguably costing the Crown an enormous sum, certainly many hundreds of millions. Genesis and Meridian were forced to reduce their listing price because of the price collapse of Might River.

Goldman Sachs - 1, Key and the Crown - 0.

What Willis should do is what commonly happens overseas. The lead brokers are paid tens of millions but are required to support the market after the listing and are prevented from using the lead’s access to the stock to sugarcoat their relationship with institutional clients. 

If Kiwibank is to be listed, the shares offered should focus on retail investors, not institutions, despite the early plotting of institutions to seek prime position.

It seems obvious to me that institutions and pension funds etc. would be buying the stock to meet their promises to mirror an index, whatever the price.

Any focus on discounting the price should be aimed at NZ retail investors; the likes of Sharesies’ million clients, who might rustle up a thousand dollars each, might result in a billion dollars of demand from the largely young people who are seeking a pathway to home ownership (in most cases).

Willis will not want to follow the erratic processes used by governments of both hues in handling the sales of social asset, Air New Zealand. The Labour government sold a majority stake in Air New Zealand to the short term trader, Brierley Investments in 1989. The price was extravagant and highlighted the lack of long term strategic thinking of Brierley, a company utterly inept at long-term analysis.

By 1994 Brierley was buying for $4.55 per share a 5% additional holding in Air NZ from the Japanese airline. The Japanese pocketed a $49 million profit, having bought at a cheaper price, earlier.

In 2001, the hapless Labour government was injecting a mere $885 million to cover the airline’s errors and losses, largely stemming from a crass attempt to buy Ansett, against the wishes of Australian unions.

By 2004, Brierley had worked out that Air New Zealand was a social asset unable to make profits reliably. It realised that many of the airline’s offerings were to meet political and social objectives ( i.e. routes to isolated cities). Brierley asked Goldman Sachs to sell its remaining Air NZ shares to (unwise) institutions, when the share price was around 43 cents. 

I do not know how many hundreds of millions Brierley had lost. Nor do I know why institutional buyers from Brierley figured that the airline would build consistent profits while performing political and social sources.

Since then, the Crown has invested more money; shares have again been sold and bought back.

Today the institutions are not present to any significant extent on the share register. They have learned.

The Crown is the rightful controlling owner, offsetting inevitable losses against the value of social services (and happy voters).

Regrettably youngsters, who receive no advice but buy on price or on profile, are the biggest block of shareholders on Air NZ. 

One shudders at how much they have lost.

Sharesies reports Air New Zealand is its clients’ most favoured stock. The shares are priced today at around 43 cents and pay no dividend, while the company forecasts losses of hundreds of millions. Air New Zealand’s sole objective now is to survive and provide services to New Zealanders. The Crown will inevitably pay.

If Willis tried to sell the Crown’s holding there would be no orderly market, just as would be the case if she tried to sell the NZ Post, or the national television stations, or KiwiRail.

In contrast, Kiwibank is an established profit-making asset, held back by the government’s inability to sell without political resistance, restrained by the Crown’s unwillingness to inject a billion or two of capital, and not helped by the political input to governance, sub-optimal for any organisation.

Willis needs Treasury to support a sell-down, or sell-off, that might persuade voters that she is acting wisely.

NZ does not need a Crown-owned bank. NZ needs to reduce debt.

The Reserve Bank has already shown it can and does regulate all banks, whatever their sovereign origin, even if the RB for many years has not wanted to monitor the banks. It has long claimed that its expertise and its prioritisation does not cover daily supervision, as highlighted by the failures of the RB and Treasury to penetrate the lies told by the guaranteed finance companies that exploited the 2008 Crown Deposit Guarantee Scheme.

If Willis can raise a billion or two from largely NZ retail shareholders she will be doing a great favour to New Zealand, and providing perhaps 100,000-200.000 New Zealanders with an asset that should grow in value.

She should lay down very specific rules about who manages the sales process and who should get primary access to the shares.

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THERE are at least two more potential NZX listings that would benefit retail shareholders. 

One that is regularly discussed is the potential listing of the financial intermediary, Sharesies, whose growth trajectory far exceeds most imaginations as far as I can discern.

Sharesies set out to be a very low-cost technology-driven platform for financial securities, charging fees far less than cost while harboring ambition that eventually its growth would lead to profits. 

It funded itself from private equity investors, like Milford, and individuals with significant wealth. It would raise capital regularly at higher prices than the original price, so grew in estimated value until it reached an alleged value of $500 million, while still recording losses.

Today it aspires to achieve a theoretical value of a billion, making it worth more than the big broking firms, which make tens of millions of net profit after tax, attract the wealthy end of town, and attract the executive and staff that are well versed in financial markets.

Given Sharesies was founded by “tech” people with no or little relevant financial market knowledge, this is an astonishing and highly laudable achievement right up beside Xero as a great NZ technology story.

It says it has nearly a million clients with an average wealth of around $4000.

It has been greatly helped by attracting much media commentary, presumably reflecting support from those in the media who are Sharesies’ clients.

Sharesies has added a range of extra services, the most recent being a robotic advice service. It offers a range of exchange traded funds to Kiwisaver people.

The original shareholders who took the plunge and worked hard and successfully retained small holdings will emerge as genuinely wealthy people if a listing occurs and if there were no escrow conditions preventing them from selling their shares.

My applause for them is sincere.

An NZX listing would add to the NZX new market capitalisation by at least a billion dollars.

_ _ _ _ _ _ _ _ _ _

A SECOND potential listing is maybe more valuable and seemed just as unlikely as Sharesies a decade ago.

The Auckland-based finance company Avanti has grown to the size of a decent-sized bank, focusing on lending on flexible home loans, car loans, personal loans, small business loans and now commercial property loans.

Its debt collection record implies strong lending disciplines.

Its profitability implies pricing loans wisely.

Its cost of funds displays access to wholesale markets which are always more discerning than the likes of retail deposit taking companies.

Its asset growth is extraordinary, now exceeding four billion dollars.

It was founded in 1989, has several hundred employees, and probably makes net profits after tax exceeding $50 million.

It has achieved all of this under the leadership of Glenn Hawkins, now one of the Auckland wealthy group but one who wisely does not engage much with the media and does not boast about his wealth.

He would know the media might not judge him on his commercial and business skills, and proven success. Media might prefer to focus on his controversial father, Allan Hawkins, once (in the early 1980s) the managing director of CBA Finance, in New Zealand, a bank-owned respectable entity.

Hawkins had left CBA Finance to establish the ill-fated Equiticorp Finance, employing young people whose moral compass was often not well-set.

Hawkins involved himself in various equity deals which eventually destroyed Equiticorp, including a deal to buy NZ Steel, which was found by a High Court to have been illegally structured by Treasury and Equiticorp, leading to a $300 million (plus) payout by the Crown to Equiticorp debenture investors.

Hawkins went to Ohura Prison, emerged and sought to re-establish himself in business, but eventually accepted he had no place in business, hounded, quite naturally, by the media. He would now be in his 80s.

Meanwhile his son Glenn was building Avanti Finance on much stronger principles than Equiticorp ever established.

Nor did young Hawkin provide bows and arrows for any cowboys who wanted a role in his company. He has built an admirable business. Avanti has grown in reputation, in performance, and in creditworthiness.

It would now be an excellent addition to the NZX, and would no doubt consider a listing if this was needed to accelerate its market dominance.

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THE tiny Central Otago town of Tarras would probably be unknown to 90% of New Zealanders but for the plan to build Central Otago’s major airport there.

Tarras has a few hundred residents, many of whom are crib owners. It is a nice, tiny rural town, with a golf course inhabited by sheep, an old community hall and a few retail shops.

Somehow a Wellington visitor with a crib in Tarras persuaded some locals to appoint her to the role of heading the small group of residents who opposed the airport proposed by Christchurch International Airport Ltd, which had acquired land for the project.

The visitor, an environmental activist Suze Keith, generated enough heat that CIAL deferred its plan.

Keith in this defacto spokeswoman role has since moved to the latest issue, a proposed gold mine about 20 kilometres south of Tarras.

A Victoria University academic with some environmental consultancy role at the Greater Wellington Regional Council, Keith is a skilled driver of support in Wellington’s left wing media and a skilled driver of social media content.

She manages the media very well.

I am unsure why any council would ever employ an environmental activist. If I were chairman of such a council, I would seek knowledge and independent thinking but not heavy single-minded input.

Yet one can tip one’s hat to her skill in exploiting the media.

This exploitation now has reached a head.

Two quite controversial characters have been engaged and described by her group as “independent experts” to participate in expert panels, providing the Fast Track Panel with input as the panel has a first pass at approving, deferring or denying the Santana gold project consent. One, a woman, is a genuinely experienced landscape architect, the other is a tourism lecturer.

Santana’s legal counsel is now seeking to have those experts “outed” as activists who allegedly indulged in anti-mining chit chat on social media, reflecting ideology that might debar them from any panel definition of an independent expert.

The social media used usually allows pseudonyms, though in these “expert” cases pseudonyms were not used.

If the challenge to their independence succeeds, NZ might make the first step in addressing this modern curse – the use of pseudonyms in social media, facilitating conversation best described as dangerous codswallop, delivered usually by halfwits. Hopefully, one day only real names will be used.

I refer here to the likes of media and social media discussion about the 10,000-year life of a storage facility of rock topped by a shallow layer of water at the Santana site. Such discussion is nonsensical as the facility outlives mining by weeks, not years, and is no more a 10,000-year threat than a humpback whale swimming around Wellington Harbour.

Within months of the end of mining the facility there will be a hill covered in pasture greatly more stable than most hills, given its structural support of concrete, steel, and crushed rock.

If, as Santana claims, “independent experts” are just an extension of an activists’ group those “experts” most certainly should be outed for what they are.

The panel, led by a KC, will make the decision on their “independence”.

Note: I applaud the Santana Supporters Group which allows its huge, mostly local, contributors to make social media postings only if they use their real name. How refreshing!

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Travel

28 May - Kerikeri - David Colman

29 May - Whangarei - David Colman

30 June – Christchurch – Chris Lee 

July 1 – Christchurch – Chris Lee 

Chris Lee & Partners Limited

Taking Stock 7 May 2026

Chris Lee Wrtes:

ANY prudent investor will begin any investment plan by first paying attention to the short-term and long-term issues, here and globally.

Here the short-term is fairly easy to forecast - stagflation. That is, high inflation, falling growth, high unemployment, high interest rates, continuing rise in corporate failures (cafes, restaurants, bars, construction companies, tourism ventures, vineyards etc) and inevitably higher taxes. 

That part of the analysis is foreseeable.

In NZ the long-term is equally linear.

If we are to rebuild our dreadfully-maintained infrastructure (bridges, pipes, hospitals, schools, rail, ferries) and strive to meet minimum support levels for our most disadvantaged people, we will rely on a mix of the following:

- New projects delivering billions (collectively) in corporate taxes (extraction industry, energy generation, technology, etc).

- A substantial reduction in superannuation spending.

- New taxes (realised capital gains, as an example).

OR

- More borrowing (at a horrid cost). Our creditors might have a view on the best option. So might Moodys.

Investors will be aware of this. They will see the bifurcation of living standards; an inevitable rising level of inequality and dysfunction. Nobody will enjoy the result.

So investors will err on the side of caution, focussing on securities issued by companies with government ownership or on securities in companies that have pricing power, such as the energy sector.

While still considering New Zealand they may notice some telling trends such as: -

- Falling birthrates of Pakeha families, leading very soon to quite dramatic demographic changes. (NZ Asians may within two decades have the largest number of voters.)

- Falling education standards in some groups.

- Tech barons concentrating the country’s private wealth.

- Our fabulous rural sector increasingly dependent on immigrants.

- Longevity multiplying the number of people dependent on the tax-payers.

- MMP making our political system highly dependent on successfully managing disparate minority groups, leading to political instability and solutions that are sub-optimal.

- Shrinking of middle-income jobs (AI).

- The ultimate mix of these trends quite quickly leading to a version of democracy that will welcome any damage to capitalism, encouraged by the sub-standard media.

- Weather events accelerating the need to retreat, leading to expensive development of inland settlements.

It is easy to conclude that in anticipation of this environment there is a likelihood of an investor retreat to capital protection, followed by planned use of capital, rather than accepting the risk of uncontrollable capital loss, to avoid capital consumption. Growth may be an objective for the rich, and maybe the optimistic, educated young.

I will revert to a likely strategy later in the article.

When looking at the global scene, investors cannot help but focus on:

- Territorial warfare, some based on the wish of the most powerful to control transport fuel.

- The new emphasis on military might rather than the agreed order of international law.

- The vulnerable trade agreements, with contrivances like tariffs being imposed arbitrarily for reasons as quixotic as disagreeing with a powerful country’s vainglorious president.

- An uncomfortable trend to grossly inflate defence (attack?) budgets, the US, as an example, seeking an NZ$5 trillion budget for next year, three times the bigger budgets of previous years.

- Continued unmanageable illegal migration to wealthy countries.

- Continued growth in mind-destroying illegal drugs.

- Falling birth rates, pretty well everywhere in the Western world.

- Extreme inequality in major economies, displayed by all-time highs in the US stock market, blind faith in the certainty of AI bringing wealth to the world.

- The end of US hegemony (the enforcer role).

- Growing unwillingness to reduce the weather changes that are related to human behaviour (pollution of waterways and the sea, as an example).

The global picture is uglier. The trends seem harder to reverse.

The value being created by new pharmaceuticals, by analytics, by data collection, by super computers, by new health solutions, and by pooling knowledge is being offset by military power, exploited by the likes of the US and Russia, with slightly lesser powers (Iran) keen to impose its ideology.

Readers will note I have not singled out China as a threat. It may be a part of the solution.

(I note its leadership in many new potentially advantageous technologies and a rather more subtle approach to international relationships than the US.)

So investors, having considered these and no doubt other difficult issues, then have to settle on an honest assessment of risk tolerance, sculpt an asset allocation that fits that risk profile, and then choose individual assets (or ETFs or fund managers) to meet their goals, probably with the help of the best available advisors.

Having ploughed through all those problems, investors are entitled to some help.

In New Zealand the current government has realised that for many older New Zealanders like me, part of the answer lies in sidestepping incalculable risk.

Twenty years ago, in pursuit of extra returns, some 250,000 mostly older investors used the non-bank deposit-taking sector (mortgage trusts, finance companies, credit unions etc). They, like me, believed that there would be enough meaningful supervision, and enough hefty disincentives, to ensure the information they were served up in investment statements could be usefully analysed, and could be trusted, as they made their selections.

There were government regulators (Securities Commission, Justice Department, Registrar of Companies).

There were auditors.

There were directors subject to company law.

There were trustees, legally tasked with monitoring company behaviour.

There were executives, subject to law, backed by penalties.

There was a Minister of Commerce (Lianne Dalziel).

Perhaps there was a marine college teaching jellyfish to behave intelligently. If there were such a college it succeeded in its task much more obviously than any of the above groups succeeded with their highly-paid roles.

Their performance was disgraceful, yet few were challenged in court.

By 2010, more than 50 of the country’s 60 finance companies had failed, mortgage trusts made ridiculous loans and defaulted on withdrawal requests for years, and investors lost in total nearly half the money they had invested in these ways, despite a belated and poorly constructed and dreadfully supervised Crown Deposit Guarantee.

Encouraged by international banking groups like the Bank of International Settlements, today the NZ government has a group of privately-owned finance companies that it guarantees unconditionally, up to $100,000 per investor, per company.

Presumably the idea behind this was to build a group of non-banks that could do second and third tier lending at the sort of scale that would need retail investor funding. More lenders create diversity.

Probably uncertain about the short and long term stability of national and international markets, investors would have a safe option when pursuing a higher margin, if the reinvention of this sector produced higher, safe, returns, the Crown guaranteeing repayment up to $100,000 per investor per company.

Investors would be solely dependent on the benign tax-payers who underwrite the risk, while investors harvested better rates.

A free lunch had been restored as the guarantee was implemented.

My view is well known. I view this as madness and presented my views that the Crown guarantee should be priced to reflect risk.

I figured 2% – 6% depending on company resilience. The Crown decided on a universal rate of less than 1%. Madness.

Finance companies are generally geared at rather more than 10 times capital, and anyway their capital is often exaggerated by under-disclosing bad loans, inflating paper profits (and retained earnings).

Finance companies are not usually listed and are unlikely to have much luck in raising capital when it is desperately needed. Worse, the finance company would exploit the guarantee, seeking to attract retail money at the same rates as the far better governed and managed well-capitalised banks.

My opposition was heard but discounted.

Many investors are at least temporarily aiming to preserve their capital and obtain fair quarterly returns.

The new Crown-guaranteed finance companies, some lurking behind the new right to call themselves banks (eg Welcome), do not provide anything close to value for risk, if one removes the shelter of the taxpayers' beneficence. 

The guarantee is a contrivance.

The investor who is, say, 70 plus, and has enough capital to amortise over his likely life span retains the option of the banks, where rates are currently lean.

To where else may that investor turn?

The bond market is functional and to date has been well-priced. There are no guarantees, outside of Government Stock.

To be fair, the 10-year Government Stock seems a much better return for risk (at 4.6%) than any finance company. Most listed bond offerors are far stronger and less geared than any finance company.

Furthermore, the bond market is liquid on a daily basis.

But the term is long, so one needs to assess the risks of meaningful rate rises on the horizon.

Shares in stable companies with pricing power, like the energy companies, offer higher returns and lower price volatility than most listed shares.

Box-ticking robots will not be much help in understanding the nuances of each bond on issue but experienced, client-focussed advisors would help.

Selecting the individual bonds is the last step of investing. Help is available. 

As this item makes clear at its opening, the prudent investor follows a logical process, beginning with some deep thought about the extremely rapid changes occurring in our financial markets, and the even faster changes clearly visible overseas.

One of the country's wisest capital market heads, now a veteran, stated over a coffee that the speed of change is now maybe 10 times what it was a decade ago.

My suggestion is to construct a portfolio, find knowledgeable advisors, put aside time to consider the big picture, and follow a logical process.

As our chairman, James Lee, noted recently, you do not have to invest. If you are not convinced that an asset makes sense to you, do not buy it!

My final thought is that it will take some extraordinary programming of a machine to absorb all the market nuances, and the true characteristics of the investor, to match personal financial advisors trained to ignore fast profits, preferring long-term client satisfaction. Machines will always be a short-cut.

SANTANA’S consent process is now moving into a stage where media access is more limited. While the process has been open to media to date, the Fast-track panel’s role was not to explain technical information to reporters, nor to ensure balanced reporting. As a result, some commentary has presented claims as fact without sufficient context or scrutiny.

If somebody records that they like listening to the hills singing to each other, and that a mine would mess with the rhythm of the music, the Fast-track panel had no obligation to do anything other than record the submission. 

It had the right to question the submitter but, in just such a submission, it would not be likely to learn much more of any relevance.

Nor would it listen to those who claim a tailings facility would have a 10,000-year life; utter nonsense, but reported as though 10,000 years was the truth. 

The Fast-track panel has to follow the law that created the panel.

It has sought submissions, politely asked questions to ensure the panellists were hearing correctly, and from those interactions has created a whole list of questions it will want to put to Santana, to learn the engineering and science of a successful mine, and how risk is mitigated.

It will then have a list of issues that cannot be mitigated (bulldozers running over lizards for example) and will then weigh the cost of these issues against the credible benefits of the project.

For example, if every square metre of the mine path houses a lizard, there might be 600,000 lizards, of which only a low percentage might be found and moved to a protected area.

The Fast-track panel might then ask if the project is to deliver $3 billion to the Crown, are 600,000 lizards worth $5,000 each? Would the Crown buy a lizard for $5,000?

Before November the panel will deliver its verdict.

If it errs in points of law, its verdict might be challenged. 

It might make a consent conditional on new conditions. For example, it might require Santana to employ Guardians of the Clutha River who might independently measure the water quality every day, week or fortnight.

It has made it clear it will respond to evidence-based claims.

What is absolutely clear is that within a few months new legislation will rule out some of the expensive and time-consuming practices like cultural reports, that are not required by covenants or legal identification of real problems.

The new practices may also require regional and local councils to compensate those land-owners who are subjected to unnecessary, expensive, conditions imposed on the land-owner.

My hope is that in coming weeks the runanga will find an offramp that leads to polite discussion on how they can help the project and benefit from it, acting cooperatively with Santana.

A great outcome would be Iwi buying a shareholding and obtaining a board seat.

If the media, other activists, and the opposition do manage to stall the consenting process, Santana investors should be aware that the company's cash on hand is around 20c per share, and that it holds data that cost Santana $100 million, identifying where the gold lies. The cash and the data would not be worth nothing.

A delayed or even denied consent would not lead to a wipe out of share price or the value of the project.

I continue to believe that both major political parties are well aware that the modelled revenue and jobs must be an important part of political party plans to enable NZ to meet its obligations to its people and its creditors.

Moodys will agree with me.

Travel

28 May - Kerikeri - David Colman

29 May - Whangarei - David Colman

9 June – Nelson (am) – Chris Lee

9 June – Blenheim (pm)- Chris Lee

Chris Lee & Partners Limited