The IOOF Holdings Limited (ASX: IFL) share price has been suffering since the Royal Commission, can it be saved by acquisitions?
IOOF Holdings is a diversified financials business that offers a variety of services to clients including financial advice, platform management & administration, investment management and trustee services. IOOF has been operating since 1846 and is now one of the largest financial services industry businesses.
Will the IOOF share price be saved by acquisitions?
The IOOF management certainly seem to think so. First it was trying to acquire an Australia and New Zealand Banking Group (ASX: ANZ) division and today it has announced that it’s going to acquire Bendigo and Adelaide Bank Ltd’s (ASX: BEN) financial planning book.
The arrangement between Bendigo and an IOOF subsidiary called Bridges Financial Services will see Bridges take ownership of the financial planning book and servicing rights and provide ongoing financial planning services to clients of Bendigo referred to Bridges via an exclusive referral arrangement.
The price for this deal is a cash consideration of $3 million on completion, and another payment payable on the first anniversary of completion, as long as a certain retention rate of clients is achieved.
Bendigo will refer Bridges’ financial planning services via its branch network.
Bendigo will provide IOOF’s Bridges indemnities in relation to any liability that may arise from Bendigo’s conduct of its financial planning business prior to completion.
IOOF Acting CEO Renato Mota said: “This partnership demonstrates how our diversified service capabilities continue to be attractive to advice groups looking to join a genuinely advice-led wealth manager.”
Analysts may keep a close eye on this deal considering all of the issues that were raised in the Royal Commission and the troubled ANZ division acquisition.
IOOF appears to offer a fully franked dividend yield of around 8%, which seems very attractively high. But the business model seems too challenged for me to consider buying shares. I would rather buy shares of the proven and reliable companies outlined in the free report below.
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Disclaimer: Any information contained in this article is limited to general financial/investment advice only. The information has not taken into account your specific needs, goals or objectives, so please consider consulting a licenced and trusted adviser before acting on the information. Please read The Rask Group’s Financial Services Guide (FSG) for more information. This article is authorised by Owen Raszkiewicz of The Rask Group, which is a corporate authorised representative No. 1264179 of Strawman Pty Ltd (ACN: 610 908 211) (AFSL: 501 223).
At the time of publishing, Jaz does not have a financial interest in any of the companies mentioned.