IOOF next cab off the rank for demutualisation

IOOF is understood to be the next friendly society to demutualise, after Over 50s Mutual members voted resoundingly to demutualise last week.

At the Over 50s meeting, 96.5 per cent of the society's 45,000 members voted in favour of the move.

IOOF managing director Rob Turner says the strong affirmative vote at Over 50s will mean an early review of the option for the society.

"Demutualisation is attracting increasing attention from our members and the board will have to review its options in light of the Over 50s vote and the cross-membership of both societies," he says.

Turner would not be drawn on when a board decision would be made on the subject, butMoney Managementunderstands the move could be raised with the membership before the end of the year.

IOOF has been on an aggressive growth plan and it is no secret that acquisitions are on the agenda to fuel this expansion. The problem facing IOOF is raising capital, as under the friendly society rules the only real option for a capital-raising is to borrow the money. It is a move most friendly society boards shy away from, for obvious reasons.

Australian Friendly Societies Association executive director Martyn Pickersgill says a lot of friendly societies now had demutualisation on their agendas.

"It is the logical step to raise capital," he says. "There are a couple of medium-sized societies in New South Wales seriously looking at demutualisation at present."

There are 57 commercial friendly societies in Australia and another 50 that only operate pharmacies.

Lifeplan managing director Chris Wright says demutualisation is always an issue for the board, but the society is not working on any plans at present.

"The board has decided not to go down that route, but we will continue to think about it," he says.

Wright says one of the questions is where the shares will be listed and what sort of a market will be created for them.

Over 50s will initially list on an exempt market, with the aim of listing on the ASX by 2003.

Meanwhile, one society that is totally opposed to demutualisation is Australian Unity.

Managing director Mark Sibree says the matter is discussed every year, but arrives at the same conclusion.

"Every year we look at demutualisation, but we think our current position is the better route to follow without analysts breathing down your neck," he says.

Sibree argues a lot of its business is cyclic, such as the health insurance, and many analysts would not understand the nature of the business.

Over 50s members are expected to receive their shares in the demutualised company during July.