NZF announced the sale of its 70% stake in Finance Direct to its managing director Wayne Croad at the end of March, who owned the other 30%, but didn't say at what price.
Croad, who says: "I felt elated. It's a really good feeling" to gain full ownership of the company, says the terms of the sale are confidential.
NZF bought 51% of Finance Direct in April 2007, paying $1.425 million. In December 2008, it increased its stake to 70% for an undisclosed sum. However, NZF's annual reports for the years ending March 2009 and 2010 valued the stake at $1.708 million.
Finance Direct has always had a big brokerage business which means it isn't completely dependent on its finance company and investor loyalty to keep taking up its debentures, Croad says
The only loans the finance company will fund are the best quality prime loans - it will provide up to $12,000 per loan. "They're all interest and principal. We don't do any capitalised deals," he says. "We're at the real conservative end with our own money."
But it's also happy to deal with a wide range of customers, brokering loans it can't write itself to other finance companies.
Croad says most of his business these days is broking. "We're still writing about the same amount of business. We're just passing it on to other lenders."
Finance Direct's latest accounts show a $114,000 net loss for the six months ended September last year compared with a $60,000 net profit in the same six months a year earlier.
Croad says that partly reflects conservative provisioning with $145,000 charged against profit for bad loans, up from $52,000 in the year-earlier six months.
Since inception in 1999, Finance Direct's total actual bad loans have totaled less than $300,000, he says.
Because its total assets at September 30 of $4.3 million, well down from $7.7 million at March 31, are well below the Reserve Bank's threshhold, Finance Direct doesn't need a credit rating.
