Deal pushes ABN Amro and Permanent into retail
Under the agreement, Permanent will outsource $200 million to ABN Amro Asset Management (AAAM) who will be responsible for managing the Australian equi-ties funds for Permanent. Permanent will distribute the funds, while ABN Amro will act as the manufacturer.
Under the agreement, Permanent will outsource $200 million to ABN Amro Asset Management (AAAM) who will be responsible for managing the Australian equi-ties funds for Permanent. Permanent will distribute the funds, while ABN Amro will act as the manufacturer.
At the same time, Permanent will roll out a range of retail funds including a global share fund and Australian share fund in April and July, respectively. ABN Amro will manage the global as well as domestic funds.
Permanent managing director Paul Lahiff describes the agreement as an alliance and signals a major push by both groups into retail funds management market.
"This was one area we looked at last year. We found we had $500 million in funds under management which obviously was not being picked up on any radar screens," Lahiff says.
"We wanted to build this area of the business and it was easier to bring a in partner than to build from scratch."
And while ABN and Permanent are not yet willing to publicly set targets for the new funds, there is an emphasis on a widening of the relationship.
"As we both become better at what we do, other products are possible as we see the relationship deepen. We would prefer to meet targets and then announce those achievements," Lahiff says.
ABN Amro is already involved in the local market offering its global equity fund to 18 master trusts and will use this to expand into a wider base says AAAM chief executive John Hartshorn.
"The financial planners we deal with are also seeking a retail commission driven fund. Entering the market in this way means the building of the brand and distribu-tion channels. In effect we are the factory for the product as well," Hartshorn says.
The move into funds management is one of five key areas Permanent hope to de-velop in a bid to recoup some of the lost revenue which came about after the Man-aged Investment Act curtailed their trustee business.
The other key areas Permanent hopes to move into are distribution networks, fi-nancial planning, outsourcing and responsible entity services.
"We have a formalised planning arm in place with about a dozen planners plus support staff between Melbourne, Sydney and Brisbane. We would like to double or even triple that in the next 12 months," Lahiff says.
Lahiff also says Permanent is examining the purchase of some accountancy prac-tices as a way to move into financial planning and expand their client base.
"We are in discussions at present with some accounting practices and we are really excited about the potential to use their untapped client base for financial planning," Lahiff says.
"The other positive is that we would pay less for these firms than if we bought into financial planning practices."
AUTHOR
Jason Spits
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