The ANZ Bank has sold off its pensions and investments businesses to IOOF for $975 million.
The sale of the wealth arm, OnePath pensions and investments, fits with the bank’s strategy to focus more on retail and business banking in Australia and New Zealand, and institutional banking supporting client trade and capital flows across the region.
The deal includes RI Advice, Millennium 3, Financial Services Partners and Elders Financial Planning.
The bank is still looking at options for its OnePath Life Insurance business, which has premiums of about $1.6 billion, and General Insurance with $226 million.
The latest sale is part of a general sell off by Australia’s major banks of non core assets. The Commonwealth Bank last month sold Comminsure Life to AIA Group Limited for $3.8 billion.
The ANZ’s CEO Shayne Elliott, who in January 2016 replaced former CEO Mike Smith who was big on building an Asia businesss, has pulled the bank away from retail banking in the region to focus on institutional customers.
As part of today’s wealth management sale, ANZ and IOOF will have a 20–year strategic alliance to make available IOOF superannuation and investment products to ANZ customers.
ANZ group executive wealth Australia Alexis George says financial services such as superannuation, investments and advice are a core part of the support for ANZ customers.
“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,” he says.
He says the the original intention was to look for a buyer of the whole business.
“I think as we’ve gone through this process it’s become clear that it’s actually better for the customers and for the shareholder that we separate the superannuation and insurance businesses and look for alternative outcomes for both of those,” he says.
OOF managing director Christopher Kelaher says the acquisition cements IOOF’s position as Australia’s leading advice-led wealth manager.
“ANZ Wealth Management has a natural fit with IOOF’s current business model,” he says. “It presents a unique opportunity for IOOF to
significantly increase scale, create value from cost synergies, and partner with an iconic Australian institution.”
He says the deal strengthens IOOF’s position as the second largest advice business in Australia by funds under advice and positions IOOF as the second largest advice business in Australia by adviser numbers.
“This increase in scale provides opportunity to eliminate duplicate back office functions and realise scale benefits,” he says.
The purchase will be funded via debt and equity raisings, including a $450 million institutional placement and a share purchase plan for up to $100 million.