Insignia Financial has executed a share sale agreement with Australian Unity to sell its friendly society investment bond business.
This will be via a divestment of IOOF Ltd, a friendly society under the Life Insurance Act 1995, which provides a range of investment bonds including the WealthBuilder product suite.
This has $1.1 billion in funds under management, as of 30 June 2023.
Australian Unity has $3.2 billion in funds under management and more than 180,000 customers.
Insignia will be paid a total consideration of up to $40 million which comprises $36 million in cash upon completion plus an additional contingent amount of up to $4 million which is payable 12 months after completion, subject to the transition of clients and funds under management.
These sale proceeds will be used to reduce net debt, Insignia said.
The firm said the sale to Australian Unity “will provide improved business focus and clarity”, while policyholders will benefit from the Australian Unity Group which is committed to growing the investment bond sector.
Australian Unity said the acquisition will strengthen the firm’s position as a leader in the space and its “strategic priority to realise the ‘modern mutual’ via the provision of innovative products and services that meet the health and financial wellbeing needs of members and customers”.
Esther Kerr, chief executive of wealth and capital markets at Australian Unity, said: “People use investment bonds to prepare for a variety of key life events such as education, housing, health and aged care and estate planning, and we look forward to working with Insignia to ensure a smooth transition for IOOF Ltd policyholders”.
Insignia will continue to provide a number of services to IOOF Ltd under a transitional services agreement for an initial period of 12 months.
The two businesses will also enter a strategic alliance agreement to support the mutual aim of providing financial wellbeing to all Australians.
The deal is subject to regulatory approval.
