Praemium reflects on exiting International business
Praemium has detailed the reasons behind exiting its International business, which was sold to Morningstar in June.
The firm had sold the division to Morningstar for $62 million which realised a profit of $46 million for the business. This saw Morningstar acquire Praemium’s operations in the United Kingdom, Jersey, Hong Kong and Dubai.
In a presentation, Barry Lewin, chairman, said the intention of the international deal had been that it could be pursued using the same strategy, technology and business process in Australia.
Instead, tax and regulatory differences overseas meant the division was a drag on the business.
He said: “This division consumed significant capital and management time over the approximate decade this strategy was pursued. That investment was originally made on the assumption that the international opportunity was at least as large as that in Australia and that it could be pursued utilising essentially the same strategy, technology, and business processes as here."
The current board and management team felt that this assumption, whilst largely correct, did not take full account of the execution risk and necessary bespoke IT development for differences in the UK tax and regulatory framework.
“In essence, it did not compare at all favourably with the wonderful opportunity here in Australia, and it provided an ongoing drag, for an indeterminate period into the future, on cashflow and profitability.”
Following the sale, this would allow Praemium to prioritise its Australian business.
Total funds under administration for the 2022 financial year at the business were $40.5 billion while platform funds under administration were $19.5 billion. These were up 10% and 6% respectively on the prior year.
AUTHOR
Laura Dew
Recommended for you
With an advice M&A deal taking around six months to enact, two experts have shared their tips on how buyers and sellers can avoid “deal fatigue” and prevent potential deals from collapsing.
Several financial advisers have been shortlisted in the ninth annual Women in Finance Awards 2025, to be held on 14 November.
Digital advice tools are on the rise, but licensees will need to ensure they still meet adviser obligations or potentially risk a class action if clients lose money from a rogue algorithm.
Shaw and Partners has merged with Sydney wealth manager Kennedy Partners Wealth, while Ord Minnett has hired a private wealth adviser from Morgan Stanley.
