How Infrastructure Divestments and Wealth Roll-ups Are Reshaping New Zealand Dealmaking

EY Parthenon Director Suresh Yahanpath discusses the structural forces driving New Zealand M&A, from local council asset recycling to private equity-backed wealth management consolidation.

New Zealand's local councils are rethinking their balance sheets

One of the most significant deal themes Yahanpath sees developing is the growing pipeline of local council asset divestments. In his view, the trend is being driven by long-term structural pressures rather than short-term market conditions.

“There's a structural funding gap emerging,” he explains. “There's a cost escalation at local councils, but from a ratepayer perspective, there just isn't the appetite for rate increases.” At the same time, councils across New Zealand face mounting capital expenditure requirements, including ageing water infrastructure, transport projects and other essential public infrastructure. Many are also approaching debt capacity limits, leaving few options to fund future investment.

With borrowing constrained and rate increases politically difficult, asset recycling is increasingly being viewed as a practical solution. A more market-oriented central government has also encouraged councils to reassess their balance sheets and consider whether certain assets could be better utilized under alternative ownership structures.

The potential transaction pipeline is broad. Assets that could attract investor interest include airport stakes in major cities, ports — such as the Port of Auckland, electricity distribution networks in provincial centres, fibre infrastructure, car parks, ferry terminals, parking assets and commercial property holdings.

The buyer universe is equally diverse, spanning Australian and international infrastructure funds, Canadian pension funds, sovereign wealth funds and strategic operators seeking long-term infrastructure exposure.

Yahanpath believes momentum could accelerate quickly if a handful of transactions demonstrate strong outcomes. “Sometimes in New Zealand, all it takes is one good result. A cell tower deal is a perfect example. One telco got a great price and the other two quickly followed because they suddenly understood the multiples infrastructure investors would pay for what had seemed like a minor part of their business that was undervalued.”

While the opportunity is significant, these transactions are rarely straightforward. Public ownership structures, multiple stakeholder groups, service delivery obligations, policy constraints, and slow decision-making cycles often create a more complex transaction environment than traditional corporate deals.

The forces reshaping New Zealand's wealth management sector

The second major trend Yahanpath highlights is the accelerating consolidation of New Zealand's wealth management industry. While consolidation has been underway for several years, activity has intensified significantly over the past two to three years as the sector has become increasingly attractive to private equity investors.

The growth of KiwiSaver has been an important driver of the increasing scale and attractiveness of New Zealand wealth and asset management platforms. KiwiSaver funds under management reached approximately NZ$123 billion as at 31 March 2025, up 10 percent year-on-year, materially increasing the pool of recurring funds managed across the sector. This scale has supported a broader consolidation theme, as established platforms seek operating leverage, distribution benefits and potential synergy value.

Australian and global private capital investors have been active in this consolidation. FirstCape was formed through the combination of Jarden Wealth, JBWere NZ, Harbour Asset Management and BNZ Investment Services, with Pacific Equity Partners taking a minority stake alongside NAB and Jarden. TA Associates invested in Craigs Investment Partners, while Mercury Capital acquired a minority stake in Forsyth Barr. FirstCape has since pursued further consolidation through its agreed acquisition of Consilium, and Craigs/TA have publicly referred to strategic M&A opportunities.

For many independent wealth management business owners, the rationale for selling has become increasingly compelling. An aging founder demographic, rising technology and compliance costs and growing scale requirements are all putting pressure on smaller operators.

At the same time, strong buyer demand has created a favorable environment for founders considering succession and liquidity options. “The economics of operating at a smaller scale are becoming increasingly difficult to justify,” Yahanpath notes, particularly as larger platforms continue to invest in technology, compliance and operational capabilities.

Longer term, he believes broader retirement savings reforms could further support sector growth. Ongoing discussions around mandatory KiwiSaver contributions and a retirement framework more closely aligned with Australia's superannuation model could significantly expand the addressable market for wealth managers over the coming decade.

Why governance and communications matter in complex transactions

Whether advising on public-sector asset sales or corporate carve-outs, Yahanpath believes one factor consistently separates successful transactions from problematic ones: effective governance and communication. “You can't underestimate the communications workstream,” he says. “In the deal I'm working on right now, the communications lead is in every weekly meeting, actively managing the plan. That's not a nice-to-have — it's essential.”

Stakeholders need a clear and consistent narrative that explains why an asset is being sold, why the timing is right and how sale proceeds will be used. Establishing that alignment early can help prevent delays, minimize stakeholder resistance and keep complex transactions moving forward.

The most successful deals are often won or lost long before formal execution begins.

AI's growing role in New Zealand dealmaking

SS&C Intralinks' AI in M&A Dealmaking: A Benchmark Study, produced with Reuters Events, found that nearly half of dealmakers globally report efficiency gains from AI-enabled tools, although adoption rates continue to vary significantly across firms and markets. Yahanpath sees a similar pattern emerging in New Zealand.

“There's strong awareness and a lot of experimentation,” he says. “At EY, we've got half the team building agents for various problems.” However, he notes that adoption remains concentrated among larger organizations, including the Big Four, investment banks, major private equity firms and large corporate finance teams. Smaller advisory firms often face greater resource, licensing constraints and potentially escalating token costs.

Despite these differences, Yahanpath sees AI adoption as inevitable.

“A corporate finance practitioner with AI on their side is always going to outperform one without it,” he says. “You move faster, and you have better data."

As AI tools continue to mature, he expects their impact to extend beyond efficiency gains and increasingly influence how firms analyse opportunities, conduct diligence and execute transactions.

Where New Zealand's M&A opportunities lie

Looking ahead, Yahanpath expects both council asset recycling and wealth management consolidation to remain important sources of deal activity. He also identifies healthcare as a sector with significant consolidation potential, particularly across general practice, dental, pharmacy and adjacent healthcare services, where fragmented ownership structures and growing operational complexity could create opportunities for platform-building strategies.

As New Zealand's deal landscape evolves, the firms best positioned for success will be those that combine deep sector knowledge with disciplined preparation, strong stakeholder management and the ability to navigate increasingly complex transactions from start to finish.

For advisors seeking to position themselves ahead of these trends, preparation and sector expertise remain critical differentiators. “Advisors who can demonstrate real sector capabilities, bring global teams to bear and prepare assets early are very well positioned,” he says. “The work happens before the mandate.”

Disclaimer

The views expressed in this article are the views of the author, not Ernst & Young or EY-Parthenon Limited. This article provides general information, does not constitute advice and should not be relied on as such. Professional advice should be sought prior to any action being taken in reliance on any of the information.

For more insights from experienced dealmakers on the trends, technologies and strategies shaping M&A across Australia and New Zealand, explore other interviews in the Intralinks Senior Dealmaker Series: