ANZ sells part of Wealth Business to IOOF

While the share market moved higher, Australia and New Zealand Banking Group Limited’s (ASX: ANZ) stock edged up slightly on October 17, 2017, as the bank announced about selling of its OnePath pensions and investments (PI) business and four aligned dealer groups (ADG) for $975 million to IOOF Holdings (ASX: IFL). ANZ’s life insurance business is out of the deal and retained by the bank, and the dealer groups include RI Advice, Millennium 3, Financial Services Partners and Elders Financial Planning (collectively, ANZ Wealth Management). 

Transaction Details (Source: ANZ Company Reports)
 
For IFL, the deal was done on earnings before interest and tax multiple of 9.8 times and price to earnings multiple of 15.5 times; and is expected to be complete in one year. IOOF will be funding the acquisition through a $450 million fully underwritten institutional placement, a share purchase plan and new debt facilities.
 
At large, the partnership will enable ANZ provide its customers with access to quality wealth products from a specialist provider with the right cultural fit, financial strength and digital capability; and marks a shift from manufacturing to distribution set-up for the bank in wealth management. ANZ has been spinning off its assets while the bank intends to refocus on local retail banking business.
 
On the other hand, this move is expected to strengthen IOOF’s scale in the advice-led wealth management market with savings of $65 million per annum from 2021. Further, IOOF’s funds under management will enhance by $48 billion. As at June 30, 2017, IFL reported for $109.5 billion in funds under management, administration and advice (FUMA). Further, IFL will be adding 717 advisers under the deal, and this will lead to an adviser number rise to 1700m, just second to AMP.

ANZ’s Wealth Management’s Segments (Source: IFL Company Reports)
 
ANZ and IFL will be signing a 20-year strategic alliance agreement for the distribution of IFL products to retail, corporate and SME banking customers, and through ANZ’s financial planners.

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