Upbeat IOOF on hunt for deals as inflows surge

IOOF is poised to take full advantage of the negative press engulfing the banks.

IOOF managing director Chris Kelaher. Picture: David Geraghty.

IOOF is poised to take full advantage of the negative press engulfing the banks, as it hunts for acquisitions and seeks to grow its adviser base amid consolidation in the sector.

The wealth management firm saw net inflows in the full year surge 156 per cent to $4.6 billion, including $976 million from 33 new advisers, as it reaps the benefits of advisers deserting the big banks.

Labelling it a “very pleasing result”, IOOF managing director Chris Kelaher said it showed the company could deliver growth organically as well as through M&A.

“This (result) is confirmation that building out a more organic profile is paying dividends and we’ve balanced the business on both sides,” Mr Kelaher told The Australian.

“Our outlook going forward is very encouraging — we’re attracting advisers and we’re growing our assets so we’re in a good space right now.”

IOOF helps to administer ­retail super funds, which account for about a third of Australia’s $2.1 trillion pool of retirement ­savings.

Mr Kelaher said the company was well placed to benefit from industry consolidation, as it seeks acquisitive growth.

“Some of the larger institutions have copped a lot of negative press and they’re examining whether they want to be in this space,” he said.

“The fact we’ve turned the corner at June 30 with no net debt means we’re well placed should there be any opportunity for any of that sentiment to play out.

“Our M&A challenge at the moment is we’ve never been busier … and we’re looking at a number of different opportunities as we speak.”

Despite reports that IOOF has been excluded from bidding for ANZ’s wealth management business, the wealth manager did not rule it out in an investor call yesterday.

“They were very coy, they didn’t rule out having a tilt for at least part of the ANZ wealth business, which is supposedly up for sale, and they said there were no limits on size,” JPMorgan analyst Siddarth Parameswaran told The Australian.

IOOF’s share price jumped more than 7 per cent following the result, hitting a two-year high of $10.71, before easing slightly to close at $10.69.

Statutory net profit for the year fell 16 per cent to $116m and included a $40m impairment charge the company announced last month relating to its holding in Perennial Value Management. Underlying net profit slipped 1 per cent to $169m, beating analyst ­estimates.

“It was a very good update, particularly given where expectations were for the result,” Bell Potter analyst Lafitani Sotiriou said.

“They beat in each division and there was particular strength because of the cost-out they managed to achieve, which was ahead of expectations.”

Mr Kelaher said flows were strong leading up to the end of the financial year ahead of the $1.6m cap on transition to retirement (TTR) superannuation portfolios, but that, surprisingly, flows had not slowed last month.

“Whether that’s because the government is staying out of the sector, and between now and the next election there will be no changes, it bodes for a stronger time and positive flow.”

Mr Kelaher believed there was a burgeoning bipartisan approach to super at a political level, and that it was “quite suicidal” for governments to keep interfering with the system.

While he did not think there would be much change to super ahead of the next election, opening up the modern awards regime would give IOOF access to the 30 per cent of the market that it was currently locked out of.

“That’s pretty exciting for us, and we have every hope, particularly given the anti-bank sentiment out there at the moment, that we should be successful in that opportunity,” he said.

The company declared a final dividend of 27c per share, fully franked, bringing the full-year dividend to 53c.