Top 50 dealer Group Report: Dealer group takeover activity ramps up

Count Financial, Avenue Capital Management and Austock were among a number of firms that saw all or part of their business taken over by a competitor.

In March, BT Financial Group (BTFG) announced the recruitment of five financial planning practices from Commonwealth Bank of Australia-owned group Count Financial.

The five groups joined BTFG’s dealer group, Magnitude, within which they retained their “identity”, according to BT Financial Group’s head of advice, Mark Spiers.

“The success of their practices has been around their own identity and we will just work with them to help them continue to grow and develop their business,” Spiers said at the time.

Later into the year, dealer group Avenue Capital Management shut down its operations following its transaction with the IOOF-owned Lonsdale Financial Group.

“As a result of recent changes to the Avenue Capital Management Limited business, we will no longer be providing services effective 30 June 2012,” a statement on the company’s website said.

All 30 advisers associated with the group joined Lonsdale, the statement said.

“Effectively, the alignment of all 30 advisers to Lonsdale’s AFSL (Australian Financial Services Licence) means that the Avenue Capital Management AFSL will simply no longer operate,” Lonsdale chief executive Mark Stephens told ifa at the time.

All of the infrastructure and assets associated with Avenue Capital Management were therefore transferred to Lonsdale.

Then in July, Austock Group advised the market it had reached an agreement for the sale of its property business to Folkestone for $11 million.

Austock Group shareholders approved the sale in September and extended the date for completion to 28 September.

Austock non-executive chairman George Beaumont said that while the business had “considerable potential, Austock alone did not have the capacity to help it achieve that potential”.

Since the end of the financial year on 30 June 2012, takeover activity has only ramped up, with a number of deals set or expected before the end of the year.

On 27 September, CCP Bidco announced it had successfully obtained the required 50 per cent interest in ClearView Wealth’s company shares, making its offer unconditional and allowing the takeover to proceed.

In line with the implementation agreement between the two entities, Clearview Wealth declared an unfranked dividend of 2.2 cents per share to shareholders who accepted the offer.

“It is effectively done because the conditions that were outstanding a while ago for Australian Prudential Regulation Authority (APRA) approval, Foreign Investment Review (FIR) board approval and 50.1 per cent of shareholder acceptance [have been met],” Clearview managing director Simon Swanson told ifa at the time.

In August, the Clearview Wealth board agreed to an implementation arrangement with CCP BidCo after the Crescent Capital Partners Management subsidiary lifted its takeover offer for the company by five cents per share.

The takeover target informed the market it had entered into an implementation agreement with CCP BidCo after it increased its offer to 55 cents per share from 50 cents per share.

The board rejected CCP’s initial $220-million takeover offer in July, claiming the price was inadequate.

IOOF’s planned takeover of Plan B also had to overcome a few obstacles.

On 9 October, IOOF closed its offer period for the business with 98.10 per cent of Plan B’s shares.

The takeover bid, which was subject to an 86 per cent shareholder acceptance, was previously scheduled to close on 25 September, following an extension from the original closing date of 11 September.

The board of Plan B said a fully franked dividend of three cents per share will be payable to Plan B shareholders on the Plan B register on 26 September.

As a result of the takeover, Plan B underwent a series of board changes. Chief executive Andrew Black stepped down from his post at Plan B and company chair Bryan Taylor, executive director Craig Lubich and independent director David de Burgh each resigned.

While many major takeovers have gone ahead prior to the end of the calendar year, many companies are still progressing with their growth and acquisition strategies as the trend towards industry consolidation continues to ramp up.

Guardian Advice, for example, plans to use an organic growth strategy to accelerate its adviser numbers.

The Suncorp-owned financial services firm plans to increase its adviser body to more than 200 over the next three years, Guardian Advice executive manager Simon Harris tells ifa.

“What we are seeing is a flight to security [during] uncertainty and regulatory change,” he says.

Given recent regulatory changes and the pressures of a tough economic environment, Guardian expects the trend in the consolidation of smaller boutique licensees to accelerate, he says.

As a result, in addition to attracting new advisers, the firm also plans to review acquisition opportunities.

“We’re continuing to review opportunities to acquire small and medium sized Australian financial services licensees where they might have synergies or scale benefits for our group. That could really accelerate our recruitment stance,” Harris says.

ifa also understands that AMP plans to purchase a further 10 per cent stake in Futuro Financial Services within 18 months before acquiring the balance of the company by 2017.

“Make no bones about it, the idea is to eventually have 100 per cent,” Futuro managing director Dennis Bashford tells ifa.

“They [AMP] will take another 10 per cent in 18 months and then probably the balance in four to five years. Whilst we have the option to sell before then I don’t believe we’ll be doing that.”

Following AMP’s initial 10 per cent minority stake in March this year, Futuro has been experiencing strong growth, Bashford says.

Futuro will continue to operate under its own license during the initial stages of the transaction and eventually will make the transition to AMP-owned dealer group Charter Financial Planning.