The Snowball Group has declared its intention to purchase Western Pacific Financial Group, which will result in scale benefits for the combined entity and a new level of funds under advice to the tune of $4 billion.
The acquisition is still subject to shareholder approval, which will be sought at Snowball’s annual general meeting scheduled for November 2006.
The deal gives the combined group a total of 80 financial advisers operating under its auspices, with 55 planners belonging to the Western Pacific Financial Group and a further 25 planners aligned with Snowball’s Outlook Financial solutions.
Snowball managing director Tony McDonald said the purchase gives the organisation the impetus to achieve its anticipated growth targets over the coming two years, which are expected to be achieved through organic growth and additional acquisitions.
“In the Western Pacific channel we’re probably talking about getting towards 100 advisers, which is not a huge amount by industry standards, but it’s quality over quantity in our book. On the Outlook side, if we were around the 50 adviser mark in the next two to three years I think that wouldn’t be too bad,” he explained.
The two advisory brands, Outlook and Western Pacific, will continue to operate independently of one another once the acquisition has been finalised, with Outlook offering planners the opportunity to work under a salaried employee structure, and Western Pacific allowing planners to be part of a dealer group model.
McDonald feels this approach gives the firm a distinct competitive advantage.
“It’s important people do recognise we are running these two models parallel with each other because it’s horses for courses. It’s a very clear segmentation strategy where we know what’s right for our affinity partners, we know what’s right for the Western Pacific channel, and while you can get efficiencies in terms of back-office functions, it is important to take the segmented approach to the market,” he said.
“We give undertakings to our affinity partners that we will run it a certain way … It’s a specialisation and you want to have specialists in both fields,” he added.
McDonald ruled out any rationalisation of practices on any grounds and said the main cost synergies the group was looking to get centred were in back-office functions, investment structuring, platform usage, asset management and insurance.
Snowball has valued Western Pacific Financial Group at $50.1 million and consideration for the acquisition will be made up of a cash component of $2.1 million and the issue of 80 million Snowball shares valued at $0.60 each.
