Ord Minnett management take control as IOOF and JP Morgan exit
Written on the 27 June 2019 by David Simmons
A consortium of private investors will acquire private wealth manager Ord Minnett from IOOF (ASX: IFL) and JP Morgan for around $164 million.
The consortium, led by current Ord Minnett management, is concurrently acquiring IOOF's 70 per cent stake in the wealth management business alongside JP Morgan's 30 per cent stake, allowing it to take full ownership of the business.
IOOF has disclosed to the ASX that it is receiving $115 million for its 70 per cent holding in Ord Minnett, resulting in a profit of approximately $85 million for the financial advisors.
The exact amount to be received by JP Morgan for its slice of the wealth manager has not been disclosed by IOOF or JP Morgan, but assuming its 30 per cent is valued at the same price as IOOF's then JP Morgan is set to receive around $49 million for its share. That brings the total acquisition price by the consortium to approximately $164 million.
IOOF's freshly appointed CEO Renato Mota says the divestment comes at the right time for the listed company.
"This is a timely opportunity for IOOF to divest its holding in Ord Minnett as we recalibrate our business and focus on our core wealth management capabilities," says Mota.
"We are committed to our advice-led strategy and are investing in client focused initiativesas well as accelerating change in our business to deliver better outcomes for our clients and members."
Robert Bedwell, chief executive officer of JP Morgan Australia and New Zealand, says despite the divestment a strong relationship will conitnue.
"We look forward to continuing our long-standing relationship with Ord Minnett, which offers strong capabilities for the distribution of our products and services in Australia."
At 31 May Ord Minnett has $10.1 billion in funds under administration, with 265 licensed financial advisers on the books. The wealth manager contributed $11 million to IOOF's underlying net profit for the 11 months to 31 May 2019.
"Ord Minnett is a high-quality business and has been successfully led by its board and management, under IOOF and JP Morgan ownership, for over a decade," says Mota.
"IOOF will continue to provide services to Ord Minnett for the next 12 months to ensure an orderly transition for the company and its clients."
Business News Australia
Author: David Simmons