AXA Asia Pacific Holdings acquires ipac Securities Ltd.

AXA Asia Pacific Holdings (AXA) has today announced that it has reached agreement to purchase 100 per cent of ipac Securities Limited (ipac) for $205 million.

Les Owen, Group Chief Executive of AXA Asia Pacific, said “This decision is in line with our stated strategy of growing in wealth management through acquisitions of financial advisory businesses. This follows on from our acquisition of Sterling Grace in October last year and is another step towards achieving our aim of being in the top five in net retail funds inflows.

ipac is one of the most respected and leading wealth management advisory businesses in Australia. It manages approximately $4.7 billion for over 20,000 retail and wholesale clients. Retail funds under administration are approximately $3.3 billion. ipac has 33 advisers operating in four locations around Australia. It also has strategic relationships with 81 independent advisers. Total annual net flows were $731 million (source: ASSIRT March 2002).

“This is an exciting opportunity for AXA to acquire a leading, high quality financial advisory business which builds on our earlier acquisition of Sterling Grace. This strategically positions AXA as a leading provider of advisory services and accelerates our growth and penetration into the independent financial planning market in Australia.

“I look forward to working together with ipac management to support the growth of the ipac brand and the ipac advisory model. It is one of the premium brands in financial planning in Australia. ipac will continue to operate under that brand with the same business model and management team, including the founding ipac directors.

“With over 1,100 advisers in AXA’s existing Australian networks, we see significant benefits flowing from using elements of ipac’s model and expertise.”

“Together AXA (including Assure) and ipac will be in second place in the growing master trust segment with more than $11 billion in funds under administration. Based on ASSIRT figures as at March 2002, AXA combined with ipac will have total retail assets under management of more than $17 billion excluding cash, placing us fifth in Australia.”

A retention and deferred performance incentive programme for ipac’s executive directors and key staff has been agreed. Under the programme approximately 22.6 million shares in AXA APH may be issued to key ipac executives, subject to meeting strong future growth in funds flows for ipac and AXA over a five year period. The achievement of the hurdles will create significant value over and above the initial consideration.

The 22.6 million shares will be funded through the issue of new shares over a five year period depending upon the achievement of the hurdles.

In order to neutralise the dilutive impact of any issue of shares under the incentive programme, AXA intends to buy-back on market 22.6 million AXA APH shares (approximately 1.3% of the issued capital), commencing shortly.

It is expected that the transaction will be accretive from 2003.

Arun Abey, Executive Chairman of ipac said, “We are very enthusiastic about the future with AXA. It provides us with the opportunity to accelerate our growth, while preserving the unique qualities of ipac’s successful advisory business model.

“AXA and ipac share a common vision to grow advisory businesses and focus on clients needs. The independence of ipac’s advice model is important and will be retained.

Mr Abey said the past year has been a record one for ipac, notwithstanding the very tough market conditions.”

“ipac’s internal financial planning business has experienced steady growth, as have our strategic partners. The acquisition programme that we launched over a year ago has resulted in the purchase of seven financial planning firms so far. This includes some firms that have been acquired in total and others where we will move to total ownership over a period of several years, with payment being linked to performance.

”ipac’s business model, AXA’s global strength and capital base, and the combined resources of the two groups put us in a very good position to become firmly established amongst the industry leaders in the medium term.”

The transaction will not affect the AXA – Alliance Capital joint venture and agreements or ipac’s multi-manager approach.

Completion of the acquisition is subject to necessary regulatory approvals and is expected to be finalised around mid August.

Some key facts about the ipac business are attached.

For further information please contact:

Media:
Neil Swindells
General Manager Distribution
Telephone: (03) 9616 3638 or Mobile: 0411 264 785

Investor Relations:
Kent Griffin
Group Treasurer and Chief Actuary
Telephone: (03) 9616 3600 or Mobile: 0411 323 937


ipac – FACT FILE


ipac complements AXA’s existing wealth management interests in Australia, in much the same way that last year’s acquisition of Sterling Grace did in New Zealand. Both businesses strategically position AXA closer to client relationships, the benefits of which are greater capture and defensibility of margins, as well as actionable insights across the value chain into the issues of relevance, value and concern to clients.

In addition to AXA’s existing positioning of a manufacturer and distribution services provider, it extends AXA capabilities into the client relationship and advice components of the value chain, which is the source for all the upstream revenues of distribution, manufacturing, and asset management.

AXA’s existing wealth management business is built on its expertise in product manufacturing and distribution services. AXA offers a large suite of retail funds, supported by the fast growing Summit menu based master fund and dealership services. These are offered to both AXA’s aligned distribution network and to third party planners who construct their own portfolios for clients from AXA’s menu.

ipac’s business is based on the provision of ongoing financial planning advice and the efficient implementation of that advice. ipac’s lifestyle financial planning model provides a holistic view of a client’s financial needs and life goals providing value added services in areas such as cash flow management, taxation advice and investment solutions.

ipac planners implement their advice through a menu of investment strategies offered through ipac’s Strategic Investment Service “manage the managers” platform. ipac employs a specialist portfolio management team that is responsible for asset allocation and manager selection so that ipac planners can focus on building personal and caring relationships with clients. ipac planners also have the ability to customise clients’ portfolios further through a wrap service that offers access to an extensive range of specialist strategies and boutique managers.

In addition to its retail business, ipac was one of the pioneers of the implemented consulting model and in recent years it has built one of the most flexible multi-manager wholesale investment platforms in Australia.