The two businesses represent an aggregate profit of $39 million, with financial services company IOOF purchasing them in a deal representing over 25 times their combined FY17 net profits.
The deal also involves ANZ entering into a 20–year strategic alliance to provide IOOF superannuation and investment products to ANZ customers.
OnePath P&I has over $48 billion funds under management and offers multiple retail and employer-targeted superannuation products.
The ADG business consists of 717 ANZ-aligned financial advisers, who manage $19.5 billion in funds under administration; it includes the sub-brands Millennium3, RI Advice, Elders Financial Planning and Financial Services Partners.
ANZ will retain several major OnePath businesses including Life Insurance, General Insurance and Life Company products, collectively worth more than $1.8 billion in current insurance premiums. The bank also retains ANZ Financial Planning, which consists of 286 licensed financial advisers Australia-wide.
ANZ’s sale of the businesses is part of the company’s strategy to simplify its operations, focusing on retail and business banking across the region with a lesser emphasis on superannuation products.
The deal follows the divestment of ANZ’s online share trading platform (formerly ETrade) to CMC markets earlier this year.
Canstar’s General Manager for Wealth, Josh Callaghan, said ANZ had been courting buyers for OnePath for “some time now” in an attempt to “outsource its wealth product manufacturing”.
Mr Callaghan said the 20-year distribution deal with IOOF means “it’s not going to look much different” for OnePath customers.
ANZ still committed to wealth customers
ANZ’s Group Executive Wealth, Alexis George, emphasised that ANZ was still committed to providing quality wealth-building products to its customers.
“Financial services such as superannuation, investments and advice are a core part of the support we provide ANZ customers now and in the future,” Ms George stated.
“By partnering with IOOF, we are able to create greater value for our shareholders while also providing our customers with access to quality wealth products from a specialist provider with the right cultural fit, financial strength and digital capability.”
Ms George insisted that both the bank and its customers would benefit from the separation of ANZ’s insurance and superannuation arms.
“The sale of our P&I and ADG businesses provides ANZ with greater flexibility to consider options for the life insurance business including strategic and capital markets solutions,” she said.
“We’ve still got customers out there that we need to serve, but we really found out that during the process it’s better if we separate the businesses. It gives us a much cleaner look at what we do in insurance.”
ANZ expects the deal with IOOF to be completed within 12 months, subject to regulatory requirements and the restructuring of OnePath to separate its insurance and wealth businesses.
Small payments up to the full value of the deal will continue to be made throughout the 20-year strategic agreement between the two companies.