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Kiwibank swallows up Gareth Morgan's investment firm

Kiwibank is buying Gareth Morgan Investments, the funds management company owned by high-profile commentator and economist Gareth Morgan.

High-profile commentator and economist Gareth Morgan has sold his funds management company to Kiwibank and will funnel the proceeds into charity via the Morgan Foundation.

Gareth Morgan

Gareth Morgan

Gareth Morgan Investments is one of the largest funds management firms in the country. It handles more than $1.5 billion for more than 57,000 clients, including the Gareth Morgan KiwiSaver Scheme – $650 million is KiwiSaver-related.

State-owned Kiwibank would not disclose the purchase price but said in a statement that GMI would run as a standalone operation  under the Kiwibank wealth and insurance arm.

Morgan will remain a major client of the business and a member of the investment strategy team.

Morgan and Andrew Gawith – a fellow economist who co-founded the company – will also stay on as directors of GMI alongside two Kiwibank-appointed directors.

Morgan said he had grown tired of running such a large business, according to Fairfax.

Kiwibank chief executive Paul Brock described the purchase as a unique opportunity to rapidly grow its wealth and KiwiSaver businesses.

“The aligned values of both organisations reinforced the decision to buy rather than build."

Kiwibank was launched in 2002 and has about 800,000 customers.

Its KiwiSaver scheme was born in 2010 and currently has 15,000 customers. Growth had been "impressive", Brock said, and its management capability needed to expand accordingly.

"Our plan to do this looked very much like what GMI has developed”.

Herald columnist David Chaplin suggests the deal may spell bad news for AMP, to which Kiwibank outsources the management of its KiwiSaver scheme.

Kiwibank is likely to give AMP the boot in favour of bringing everything under its new inhouse service, he said.