IOOF Holdings Limited, a renowned Australian financial services firm, has reportedly announced that it has successfully reached a new $1.4 billion deal to acquire NAB’s wealth business. The deal cements the exit of the big four banks from super as well as wealth industries after an array of scandals as well as rising customer remediation bills.
MLC Wealth and IOOF are competitors in the field of asset and administration management, and financial advice. The proposed acquisition deal would make IOOF the country's biggest wealth management enterprise with more than 1880 advisers. Following regulatory approval, the new IOOF would service more than 2.2 million Australians by June of 2021.
Renato Mota, chief executive, IOOF described the new deal as a highly compelling business opportunity. For IOOF, MLC is considered to be a natural fit which presents the company a unique opportunity to generate value through synergies to benefit the shareholders, clients, and members. The agreement is a rare opportunity for the company to create a leading wealth management entity of the future.
The acquisition would boost the amount of funds under IOOF’s management to more than $510 billion, with over $173 billion of it in superannuation monies, which makes it the second biggest super fund in terms of assets under management in the country. The company expects that over five or six different super funds would dominate the market through the forthcoming years, as for-profit and non-profit sectors strengthen and compete for more clients.
This convergence would result in a number large funds. It is expected that the country’s biggest super fund would have over half a trillion dollars in five years. Additionally, there would also be a couple of others that would have between $200-$300 billion.
The new deal would ensure that the company is within the aforementioned five or six pack in the coming years. IOOF would also be an advice-led industry player within that projected pack.
NAB has recently confirmed the proposed takeover deal and has labelled it as a crucial part of its strategic decision to reorient its focus towards the core of its banking business.