Suncorp has entered into an agreement for the sale of its Australian wealth business, Suncorp Portfolio Services Limited, to LGIAsuper, following a strategic review which commenced in February 2020. The transaction is expected to be completed in fiscal year 2022 subject to regulatory approvals.
Steve Johnston, Group CEO of Suncorp, said the sale agreement was a good outcome for Suncorp’s superannuation members and would continue the simplification of the Suncorp Group portfolio.
“When I was appointed CEO, I said I wanted to align everyone at Suncorp around improving the way we deliver for our insurance and banking customers,” said Johnston. “This approach is already delivering results, and the wealth sale will allow the bank team to focus exclusively on the priorities we outlined at the interim result in February.”
Clive van Horen, CEO at Suncorp Banking & Wealth, said that after extensive engagement with a number of potential acquirers, the group believes LGIAsuper is best placed to deliver sustainable member outcomes.
“The values and purpose of LGIAsuper, which is also headquartered in Queensland, align closely with those of Suncorp. This transaction will also enable the combined business to take advantage of size and scale benefits,” said van Horen.
Suncorp said the total consideration is estimated at $45 million. It includes a fixed amount of $26.6 million, plus regulatory capital, with consideration subject to standard completion adjustments. After allowing for separation and transaction costs, the impact of the transaction on group profit is expected to be broadly neutral.
Following completion of the sale, Suncorp will enter into an agreement with LGIAsuper to distribute Suncorp superannuation products to Suncorp customers for 18 months. LGIAsuper has agreed to offer roles to approximately 130 employees employed by Suncorp Group who work directly or indirectly within the wealth business.
According to Suncorp, its wealth business has delivered strong customer service and investment returns, with the Multi-Manager Growth Fund the best performing balanced super investment fund for 2020. At the end of December 2020, the business had $6.4 billion in funds under administration and around 137,000 members.