Equity Trustees to acquire AET from Insignia for $135m

Equity Trustees said on Monday it would acquire Australian Executor Trustees from SFG Australia, a whole-owned subsidiary of Insignia, for a total cash consideration of $135 million, just days after Insignia said "no agreement has been reached on any transaction".

The acquisition will be funded through a combination of debt and equity, including a $125 million fully underwritten equity raising via a $40.4 million institutional placement and a $84.6 million one for six accelerated, pro-rata non-renounceable entitlement offer. 

Moreover, $40 million has been secured from the drawdown of an additional debt facility with ANZ.

“This is a transformative acquisition that enhances Equity Trustees’ capability in private client trustee services while growing shareholder value,” said the trustee company’s chair Carol Schwartz.

Managing director Mick O’Brien labelled AET “a strong strategic fit”, highlighting “geographic diversity” as a key motivator with the acquisition said to help Equity Trustees breach the market in Adelaide while significantly bolstering its presence in Western Australia, Queensland and NSW.

“The acquisition delivers significant growth for Equity Trustees adding $5.4 billion in FUMAS and boosting our overall revenue and EBITDA by more than a third, and it is expected to be earnings-accretive,” Mr O’Brien said.

“It adds scale to our Trustee and Wealth Services (TWS) private client offering, particularly in our Indigenous and health and personal injury businesses, and supports our ongoing commitment to investment in products, services and technology.”

The acquisition is targeted to close at the end of November 2022, subject to ministerial approval.

Equity Trustees reports strong funds and earnings performance

Also on Monday, the trustee company announced a 12.5 per cent boost to its net profit after tax on the prior year to $24 million, on revenue of $112 million, up 10.4 per cent.

Funds under management, administration and supervision (FUMAS) added 3.3 per cent, reaching $148.9 billion.

The company also declared a fully franked final dividend of $0.49 per share, bringing the total dividends for the year to 97 cents, compared to $0.91 last year.

Commenting on the company’s achievements, Ms Schwartz said: “This is an outstanding performance, achieved in an environment that continues to be impacted by the ongoing effects of COVID-19 and substantial market volatility”.

“Equity Trustees has now delivered higher dividends in five of the last six years, after maintaining the dividend in the 2020 COVID-impacted year.”

Looking forward, the company expressed high optimism.

“The outlook is positive, with strong organic client and fund growth activity set to continue,” Mr O’Brien said.

“Equity markets volatility and rising interest rates are having an impact in the near term, however, the underlying fundamentals of our business are strong.

“We remain focused on investing for growth — with substantial investment in new technology platforms and people to enable us to capture the significant opportunities in our markets.”