Tower buys Bridges for $168m
Tower financial group has acquired master trust and financial planning group Bridges for $168 million, in a move to boost its Australian retail financial services position.
Tower financial group has acquired master trust and financial planning group Bridges for $168 million, in a move to boost its Australian retail financial services position.
Tower has also agreed to a five-year alliance with Credit Union Services Corporation Australia (CUSCAL) which wholly owns Bridges with CUSCAL receiving $20 million of the purchase price in Tower shares, which cannot be sold for two years.
The price paid for Bridges represents 6.4 per cent of funds under management and 25 times his-torical preformance earnings, comparable to prices paid for similar businesses in recent years, Tower says.
Bridges sits among the top 10 discretionary master trust providers in Australia, with $2.7 billion of funds under management.
Tower managing director James Boonzaier says Bridges has a distribution network of 110 finan-cial planners, with estimated fund inflows of $800 million per annum and a further $2 billion of funds under advice.
“I believe that this is an ideal acquisition for Tower - it gives a significant boost to our market presence, enhances our distribution strategy and continues our strategic focus on the fast growing Australian retail wealth creation market,” Boonzaier said in a statement.
The remainder of the transaction price will be funded by a mix of debt, surplus capital, and a $20 million institutional placement, which has been completed at $3.60 per share.
Boonzaier says the alliance formed with the credit union movement provides a strategic and cultural fit for Tower, allowing to sell its products to more than 3.6 million members.
“The alliance has been structured to incentivise all parties to increase funds under management," he says.
“I believe that this five year alliance will be mutually beneficial for CUSCAL, Tower and the credit union movement.”
The acquisition is expected to have a positive impact on earnings per share within 18 months, Boonzaier says.
It will increase Tower's assets under management in Australia to more than $11 billion, from a groupwide total of $17.5 billion.
Wellington-based Tower is New Zealand's largest corporate trust company with $21 billion un-der supervision.
On July 26, it expanded its Australian trustee operations with the acquisition of IOOF Australia Trustees Ltd.
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