AMP is keen to buy its wealth management rival Insignia Financial when it is in a position again to do mergers and acquisitions, say sources, but only when the target has got itself into a better shape.
Insignia Financial’s share price closed down 4.8 per cent on Wednesday after its investor and strategy day presentation, which analysts attributed to the group’s cost reduction program taking longer than expected.
Australian listed financial group AMP has recently finished its capital return program for shareholders after a tumultuous few years under former management that ultimately resulted in the sale of AMP Capital.
It put M&A activity squarely off the agenda, and it’s unlikely to be part of the conversation for some time.
But eventually, once the company has undergone a period of stability, the understanding is that AMP sees Insignia as an obvious target for a merger or acquisition, but it would need to be once Insignia has become a better business and fully integrated all its acquisitions.
AMP needs a deal to gain scale in financial services after earlier being forced to divest assets.
While there’s been plenty of chatter about AMP also looking to sell out of New Zealand at some stage, the understanding is that it has no plans to divest, because the business is a relatively strong performer for the group, though non-core and small.
Wealth manager Insignia was previously called IOOF and faced heavy scrutiny in the royal commission into the financial sector. It acquired NAB’s wealth manager MLC in 2021 for $1.4bn.
The group is not paying dividends for the first half of the 2025 financial year and says it has the ability to pay franked dividends from the 2027 financial year final dividend once tax payments resume.
On Wednesday, it also announced further details about changes to its operating segments and model.
It aims to simplify its advice segment and Master Trust platform and reaffirmed its financial year net revenue margin guidance of 42.5 to 43.3 basis points and operating expense guidance of $947m to $952m.
Its strategy was to become the country’s leading and most efficient wealth management company by 2030 through technology and product innovation, cost optimisation and simplification.
It hopes to reduce net costs by about $150m in total operating expenditure over the 2026 to 2030 financial years.
This is net of inflation and includes reinvestment in business-as-usual operating expenses to fall by about $200m.
John Wylie’s Tanarra Capital is the largest shareholder in Insignia with 14 per cent.
However, its share price has rallied strongly since September, with the price now up more than 50 per cent in the past year with its market value at $2.1bn.
Another possible buyer is Colonial First State, part owned by Kohlberg Kravis Roberts.
Meanwhile, the $51m or 22c a share buyout proposal for SelfWealth by Bell Financial was considered a big price. SelfWealth shares rallied 71 per cent while Bell was up close to 3 per cent.
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