Market News – 17 November 2025

Johnny Lee writes:

Vital Healthcare Property Trust has announced a capital raising as it looks to internalise its management contract.

Vital Healthcare owns and develops medical facilities across Australasia and is one of the last listed property trusts to be externally managed. The trust is managed by Northwest Healthcare Properties Management, based in Canada.

These types of deals can be difficult to assess from a shareholder’s perspective. In this case, Vital Healthcare unitholders will pay $214 million to Northwest to buy out the management contract and assume control of management themselves. The trust expects this to save about $21 million a year and generate tax benefits that reduce the net cost to around $177 million. Any remaining funds after payment to Northwest will be used to retire debt.

The deal was negotiated by the independent directors, as two members of the five-member board have connections to Northwest.

The internalisation will not be put to a shareholder vote. The independent directors stated that they needed to “act quickly”, without further explanation. Regardless, the transaction appears set to proceed. The $214 million will be funded by a $220 million capital raising, $190 million of which has already been completed through an institutional placement at $1.95 per unit.

The remaining $30 million will be raised through a Unit Purchase Plan (UPP) open to existing unitholders. The price will be the lesser of $1.95 or a 2.5% discount to the five-day average leading up to the close of the offer. These pricing mechanisms are designed to protect investors from market fluctuations during the offer period.

The UPP opened last Friday and closes on 28 November. Unitholders can apply for up to $50,000 of new units, with possible scaling based on existing holdings.

Northwest, which currently holds a large minority position, has agreed not to participate in the capital raising. This could signal an eventual exit, although the manager has agreed not to sell shares until after the February 2026 result, and not below a 10% shareholding until August 2026.

The agreement also allows Northwest to retain two board seats, which will reduce to zero if it sells out.

Vital also revealed discussions with Northwest about potentially selling one of its properties to Northwest in exchange for cancelling some of its shares — a proposal that would require careful management from both sides but could help remove the overhang of a large shareholder seeking to sell down.

The announcement of a discounted capital raising has sent Vital’s unit price lower, currently trading around $1.93. The move also pressured other listed property trusts as investors freed up capital to participate in the offer.

Typically, companies raise capital to fund growth or reduce debt. In this case, the proceeds will instead fund the internalisation, a structure Vital argues will produce long-term value by reducing external costs. The expected $21 million annual saving should prove accretive to earnings over time.

Applications for the Unit Purchase Plan can be made at www.vitalunitoffer.co.nz.

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A new listing has made its way to the NZX, with Locate Technologies planning to join the exchange on 3 December. Its code will be LOC.

Locate’s story is not an easy one to explain.

Locate, in principle, operates a route optimisation app called Locate2u, a document shredding business called Shred2u and an independent courier business called Zoom2u. All three are straightforward businesses to understand.

What complicates the company is its decision to use its cash reserves to buy Bitcoin, the well known cryptocurrency. Locate will be New Zealand’s first Listed Bitcoin Treasury Company.

Locate’s decision to move from the ASX to the NZX, via a Top Hat Restructure involving a Scheme of Arrangement, was prompted by the ASX cash box rule.

The cash box rule prohibits companies from listing, or remaining listed, when more than half of total assets are held in cash or cash like instruments. Bitcoin is treated as a cash like instrument under this rule.

Exceptions exist for miners, oil and gas explorers and certain financial institutions.

The NZX has no equivalent rule. Once Locate completes its listing, it will begin its Bitcoin treasury strategy. It already holds more than 12 Bitcoin, worth around $2 million NZD.

The company also operates an At The Money facility, contracting Novus Capital to sell new shares on market as required, effectively creating on market rights issues.

Locate Technologies will be a niche investment. Investors seeking Bitcoin exposure will likely continue to favour the Bitcoin ETF which is more straightforward. Locate will need to prove the value of its approach over time.

With the ASX signalling that cash boxes will not be allowed, the NZX has moved to win a new listing. Locate will be the third new listing for 2025.

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Comvita’s takeover offer by Scheme of Arrangement has failed.

The vote, held on Friday, did not secure the required 75 percent support.

The outcome will be contentious for several reasons.

Most notable is that the offer did receive majority support, with well over 50 percent of shares voted in favour, but the higher threshold proved too difficult to meet.

A similar situation occurred in 2023 with Pushpay, when 67 percent support was achieved for a $1.34 offer from Pegasus. Pushpay was ultimately acquired at $1.42 by the same group.

In the days before the Comvita vote, the board published daily voting updates. Many shareholders chose to sell their shares on market, often around 60 cents, rather than wait for the 80 cent offer to conclude.

The Board, including all independent directors, unanimously recommended acceptance. A majority of shareholders acted on that advice.

The offer price of 80 cents sat near the mid point of the independent valuation.

A complicating factor was commentary from Comvita’s founder Alan Bougen, who signalled prior to the vote that he was forming a syndicate to vote against the proposal and potentially make a counter offer. No such proposal has since appeared.

The rejection by a minority of shareholders will frustrate those who voted in favour. If no superior offer emerges, the company’s next step will be to work with its banks and major shareholders to secure funding and pursue a turnaround strategy.

Comvita was once valued in the hundreds of millions, with a double digit share price and strong investor enthusiasm. Today, the shares trade near 55 cents.

Hopefully, the rejection leads to a positive long term outcome.

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Kiwibank Tier 2 Note Offer

Kiwibank has announced that it is considering an offer of up to $200 million of Tier 2 Notes, which will carry an investment grade credit rating.

The notes have a final maturity date of 12 March 2036 but are likely to be repaid at the first reset date on 12 March 2031. Similar notes from major banks, including Kiwibank, are typically repaid on the reset date.

Based on current conditions, we expect an interest rate of around 4.75 percent. Investors are unlikely to be charged brokerage, as Kiwibank is expected to cover these costs. Final details will be confirmed later this month.

If you would like to be added to the list for this offer, pending further details, please email us with your CSN and an indicative investment amount, and we will contact you once the details are confirmed.

We are expecting this issue to open on 1 December, with payment due around 10 December.

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Travel

5 December – Christchurch – Chris Lee

8 December – Christchurch – Chris Lee

Chris Lee & Partners Ltd