ANZ will offload its pensions and investments business OnePath along with four aligned dealer groups as part of a 20-year strategic alliance to make IOOF superannuation products available to ANZ customers as it becomes the latest bank to exit wealth management.
IOOF says the acquisition will scale the company substantially, with funds under advice up 34 per cent and financial adviser numbers up by around 700, or 71 per cent.
IOOF will now also control $48 billion of funds under management, meaning it will become Australia's second largest advice business by adviser numbers.
The transaction will be funded through a $450 million fully underwritten institutional placement, a share purchase plan, and new debt facilities. The group will sell shares at between $10.35 and $10.70 each, representing a 5-8.1 per cent discount.
IOOF Managing Director, Christopher Kelaher says the acquisition cements IOOF as the leading wealth manager in Australia.
"ANZ Wealth Management has a natural fit with IOOF's current business model," says Kelaher.
"It presents a unique opportunity for IOOF to significantly increase scale, create value from cost synergies, and partner with an iconic Australian institution."
The 20-year Strategic Alliance Agreement opens IOOF up to approximately 5.6 million retail banking and 500,000 corporate, business and SME customers.
"Partnering with one of Australia's leading banks will provide IOOF with access to a significant number of customers through complimentary distribution channels, further strengthening and diversifying our core wealth management business," says Kelaher.
The ANZ Wealth Management dealer groups that form part of the acquisition includes RI Advice, Millennium 3, Financial Services Partners, and Elders Financial Planning.
Completion of the acquisition is expected in around 12 months.
The deal will help ANZ increase its capital ratio to help it meet new and tougher requirements from the banking regulator APRA, and it says the sale will not have a material impact on its overall profitability.
"By partnering with IOOF, we are able to create greater value for our shareholders while also providing our customers with access to quality wealth products from a specialist provider with the right cultural fit, financial strength and digital capability," says ANZ Group Executive Wealth Australia, Alexis George.
"Financial services such as superannuation, investments and advice are a core part of the support we provide ANZ customers now and in the future," says George.
"The sale of our P&I and ADG businesses provides ANZ with greater flexibility to consider options for the life insurance business including strategic and capital markets solutions."
Business News Australia
Help us deliver quality journalism to you.
As a free and independent news site providing daily updates
during a period of unprecedented challenges for businesses everywhere
we call on your support