NEWS UPDATE: AWM's Kelaher wins in scale play

The chief executive of Australian Wealth Management (AWM), Chris Kelaher, has emerged as a major winner in his company’s planned merger with IOOF Holdings Limited, with Kelaher to become chief executive of the combined entity.

The merger, revealed to the Australian Securities Exchange (ASX) this morning, will result in some of the biggest names in the Australian financial services industry being brought under a single umbrella. Those names include Bridges, Ord Minnett, Spectrum, sAustralian Executor Trustee and Perennial Investment Partners.

The rationale behind the merger has been described to the ASX today, with briefing documents explaining that the new, merged entity would have a market capitalisation of approximately $700 million based on current prices, with post tax cost synergies in the order of $20 million a year in the first 12 months.

According to the briefing documentation, not only will Kelaher be chief executive of the new group, there will be four IOOF directors, including Ian Blair and three AWM directors, including Kelaher.

It said other positions would be filled from within both organisations on the basis of merit.

The briefing documentation said where wealth management was concerned, the rationale behind the merger was the desire to generate a vertically integrated wealth management business with a strategy based on owning both product and distribution channels.

“The ultimate objective (is) to earn multiple slices or revenue from the one transaction,” it said.

Speaking to Money Management, Kelaher acknowledged the underlying objective was scale and that he was pleased with the synergies that were going to be achieved and the benefits that would flow with respect to the funds management presence of Perennial Investment Partners.