Tower Financial Services Group will kill off brands including Austrust, National Insurance and South Pacific Insurance and rebadge them under the Tower name in its ongoing quest to establish Tower as a major brand in the Australasian funds management market.
The decision to consolidate the brands follows the group’s $195 million takeover bid for FAI Life. Tower group managing director James Boonzaier says if successful, the takeover could have positive knock-on benefits for financial planners.
“The economies of scale involved in this deal will make us more competitively priced at a time when everyone’s margins are under pressure. We will be pouring marketing money into a single brand to make it easier for advisers to sell the products,” he says.
The takeover will increase Tower’s Australian funds under management by 50 per cent, meaning the $6 billion now managed in Australia comprises more than half the group’s overall total of $11.8 billion.
Boonzaier says Tower has shown consistent 25 per cent annual growth for the last seven years, half through organic growth and half through acquisitions.
Tower, the second largest fund manager in New Zealand, has made three other Australian acquisitions through Adriatic Life, Friends Provident and Austrust.
Although the size of the FAI merger is around twice the size of the Friends Provident deal, he predicts the amount of jobs lost would be relatively small compared to the approximate 80 shed in 1996.
Boonzaier says synergies between the two groups lie in administration, technology and distribution channels. Currently, both Tower’s and FAI’s products are distributed through independent agents.
“I expect this to allow us to expand our number of distributors. A lot of agents only deal with either FAI or Tower. Now they will be able to handle both,” he says.
The offer to FAI Life shareholders closes on April 23.
