IOOF flags possible dealer group acquisitions

16-Feb-2017

By Sarah Kendell

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Despite a decline in profits over the first half of the 2017 financial year, IOOF’s debt-free status meant it was actively considering acquiring more advice groups over the course of the year as other institutions sought to pull back from the market.

Speaking at IOOF’s results presentation yesterday, managing director Christopher Kelaher said a number of divestments made by the group in the second half of last year had freed up capital to allow IOOF to consider further acquisitions in the next 12 months.

“The wealth industry is growing and has attractive long-term fundamentals, and our low net debt allows us to credibly consider a number of M&A opportunities – we have reshaped our business to take advantage of them in 2017 and periods to come,” Kelaher said.

He told financialobserver the firm would consider acquiring dealer groups put up for sale by other institutions this year, with ANZ having already flagged a possible sale of its Australian wealth arm.

“I think it’s fair to say anything that sits in our vertically integrated model is a target,” he said.

“It ranges from platform businesses to advice businesses – as long as it stays within our current channel, they are all on the target radar.”

He said unlike some of the group’s competitors, which had seen significant drops in adviser numbers over the latter half of 2016, interest to join IOOF advice groups was strong due to the open architecture model offered to advisers.

“We currently have 30 more applications under review from advisers looking to join from other institutional licensees – this is disaffected people that like our model. I think they find it a less institutionalised operation,” he said.

“Our core business is platform and advice, so it’s a big priority for us.”

The group announced a statutory net profit after tax of $74.2 million for the first half of the 2017 financial year, down from $75.1 million in the prior corresponding period.

However, its funds under management, administration and advice increased to $109.4 billion compared to $103.4 billion in the six months to December 2015, with the group’s advice business accounting for 46 per cent of total profits – its largest business division on a profit basis.

Net flows to its platform and advice arms increased 46 per cent, compared to the prior corresponding period, to a total of $1.4 billion over the six months to December 2016.

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