Are the Heartland Group Holdings Board Avatars?

The Heartland Group promotes itself as the leaders in digital banking.

From my limited interactions with Heartland Bank (NZX: HGH) I am prepared to accept that is true. Perhaps that is why, while rejecting everything I read on social media unless it is about the current All Black coach, I did pause when I read in one post that the HGH board had died of Covid and they had been replaced by avatars.

Not true of course. The board will be meeting institutional investors face-to-face and shareholders will be able to meet them during the ASM on November 8^th. Except they won’t.

Way back three months ago on August 5^th, Heartland announced that, “due to the continuing COVID-19 situation and prevalence of other winter illnesses”, the meeting would be hybrid only. That is the kind of approach shareholders might expect from risk-averse bankers although an innovative growing company would surely have left more options open. In fact, that Is what almost every other company on the NZX has done.

Why does this matter? If the company is doing well many shareholders would not give a hoot if the board was a bunch of avatars. The concern is that it seems that the myriad of small shareholders might be losing their loyalty to HGH. A capital raise in August to institutional investors was fully subscribed while a linked SPP was undersubscribed.

HGH is on a growth and acquisition trajectory. Challenger Bank, an Australian deposit taking institution, is just the latest to fall into the stable and will be funded through existing resources.  However, capital raises will continue to be a necessary part of that growth path.

Anyone who thinks investment decisions are made on logic and rigorous analytical thought are dreaming. There is a whole academic discipline on emotional investing.

This shareholder thinks the HGH board has lost a golden opportunity to press the flesh and look shareholders in the eye to engender loyalty ahead of the next call for capital. It’s been three years now and absence does not make the heart grow fonder.

Editor’s Note – Bruce’s commentary is indeed apt. NZSA has noticed (pleasingly) a greater trend towards our preferred format of ‘hybrid’ meetings held by NZX-listed entities. We also believe that a shareholder meeting is a ‘marker’ in investor engagement – as descrbied by Bruce is this article.

In Heartland’s defence, however, they contacted NZSA prior to their announcement on August 5th, outlining their reasons. The key advice they received was to disclose their reasons. In retrospect, the advice offered by NZSA would have been different – to plan for both, and ‘cancel’ the physical component should Covid-19 be a significant factor. Our apologies to all – including to Heartland.

Bruce Parkes