IOOF will pay former AM Corporation management “the high end of the $12.6 million scale” of a funds under management retention deal struck when AM Corp was acquired by the Melbourne-based group in March 2003.
IOOF chief financial officer Alan Mollison says the group has been surprised with the level of funds that have remained in the AM Corp products post acquisition, assets that stood at $2.8 billion when the deal was finalised last year.
“The payment is due now and is being calculated as we speak, and should be finalised over the next few days,” Mollison says.
The payment according to Mollison will be close to the upper limit that ranged from nothing to $12.6 million and depended on the level of FUM that remained with the group.
At the time of the sale former AM Corp director and founder David Smith indicated that financial advisers who had supported AM Corp’s LifeTrack investment and superannuation platform over the years would benefit from the sale.
According to Mollison this second payment adds to the $10 to $15 million IOOF paid last year, when it bought AM Corp assets and took on some of its liabilities, that related to payments to lawyers, an undisclosed IT firm and a group that had valued the AM Corp business.
For the year ending June 30, IOOF reported a total FUM and FUA of $15.9 billion, up 35 per cent on the previous year, and something IOOF chief executive Ron Dewhurst attributed to retaining much of AM Corp’s business.
“ The stickiness of the AM funds was something we underestimated,” Dewhurst said.
