As global private equity (PE) firms scope out the Australian wealth management industry, Finura predicts which other local names may potentially receive a takeover offer.
A trend that has defined the past six months has been overseas PE companies taking an interest in the Australian market.
From Oaktree Capital investing $240 million in AZ NGA to Insignia Financial receiving several bids from Bain Capital and CC Capital, this activity is expected to continue in 2025.
The “great privatisation of wealth”, as described by Finura joint managing director Peter Worn, was examined further on a recent Finura webinar.
Reflecting on the recent period of M&A, Worn said: “I don’t necessarily think private equity ownership is a bad thing in our space. We’re not talking about small private equity, we’re talking about really big PE firms wanting to invest in our market.
“I think that should signal to a lot of people that Australian wealth management is a really great business to be in, that people want to put huge amounts of capital into for the future.
“We have a lot of participants now looking to invest in financial planning businesses and there’s a lot of really good reasons why they want to do that.”
The joint managing director assessed what wealth management businesses are most likely to go private in 2025. Finura believes that names such as AMP, Iress, Praemium and Bravura will gain interest from PE firms this year, Worn highlighted.
“It’s highly logical that anyone who’s thinking about acquiring Insignia would also look at a business like AMP and see a lot of potential there as well as a private company,” he said.
The idea of AMP being acquired was previously floated by Colin Williams, founder of Wealth Data, last month in conversation with Money Management.
“AMP used to be the jewel in the crown but the share price has seen a slow and steady road downhill and has delivered nothing but disappointment unfortunately,” Williams said.
However, James Chown, partner in financial services M&A at Deloitte, disagreed, given AMP has already divested its advice arm to Entireti. He said: “AMP is a different business to Insignia, it has a banking arm and other components which would add a layer of complexity.”
Tech firms set to benefit
If Australia continues to capture the attention of overseas PE firms, Worn encouraged technology businesses in the advice space to begin forming relationships with these names.
“Finura has worked with other private equity firms offshore who have been buying financial planning businesses in the US and other markets for a long time. We absolutely see a real mindset shift when [an advice firm] is owned by private equity – a maturity in decision-making, a bit longer-term, certainly cost-conscious, but they definitely see technology as the critical lever to make the businesses more scaleable and cost-efficient,” he said.
“We think that tech companies would be well-served by building relationships with the future owners of these advice businesses in Australia. It is not unrealistic to expect that we see more tighter relationships between private equity, licensing and technology moving into the future.”
Also speaking on the webinar, Danni Le Grande, head of consulting at Finura, recommended that tech businesses focus more on activities that drive efficiencies in the advice process.
She described: “For tech vendors here, PE owners are really laser-focused on cutting non-revenue generating activities in businesses. It does make sense for tech vendors to really hone in on things like digital signatures and client portals.”
Insignia previously stated at its Investor Day last year that it will be enacting advice technology and process improvements, including artificial intelligence, as it aims to service 115–125 clients per adviser by FY28 from 100 currently.
