The pros and cons of NZF's deal

"Having given due regard to all of the relevant factors, we consider that the aggregate benefits to NZF shareholders of the proposed transaction outweigh the aggregate disadvantages," says corporate advisory firm Campbell Macpherson.

The transaction is worth about $5.23 million to the NZX-listed NZF, more than its current $3.3 million market capitalisation.

It will lead to a new business venture to take advantage of growth opportunities in originating mortgages in New Zealand, release cash to NZF and will relieve NZF of the requirement to fund credit enhancement of the next $100 million in new mortgage lending, Campbell Macpherson says.

It will also relieve NZF of the majority of risk around future increases in credit enhancement, insurance costs, distribution and renewing of the current $225 warehouse facility provided by Westpac which has been extended until October 2012.