IOOF’s $1.4 billion acquisition of MLC Wealth Management from the National Australia Bank will go ahead after the competition watchdog cleared the deal on Monday.
The ACCC said feedback from customers, financial advisers, and other industry participants suggested that the deal would not be likely to substantially lessen competition in the financial advice sector.
The ACCC’s review indicated that post-acquisition, IOOF would be competing with and constrained by several other large firms along with a number of smaller firms for the supply of retail platforms.
For the supply of corporate platforms for superannuation and other retirement income, the review indicated that IOOF would still face significant competition from large industry superfunds.
For the supply of financial advice, information provided to the ACCC indicated that IOOF would still only have a market share of around 10% after the acquisition, that the market would remain highly fragmented and the merged entity would face competition from AMP, a similar-sized competitor, as well as other smaller firms.
“Despite the profile and size of this transaction, it does not raise concerns under section 50 of the Competition and Consumer Act largely due to the fragmented nature of most of the relevant markets and strong constraints from remaining competitors,” ACCC Commissioner Stephen Ridgeway said in Monday’s statement
IOOF provides financial advice through employed advisers at Shadforth Financial Group and Bridges, and advice licensees at Consultum Financial Advisers, Financial Services Partners, Lonsdale Financial Group, Millennium 3 and RI Advice.
MLC provides financial advice through employed advisers at MLC Advice, and advice licensees at TenFifty and Godfrey Pembroke.
But there might be trouble ahead for the emerged company with media reports on Monday suggesting both IOOF and MLC have been losing advisors since the deal was announced earlier this year.
The Australian Financial Review said that IOOF had 80 fewer financial advisors at December 3 than at August 31 when the sale was announced.
MLC has 50 advisors decline to move across and join IOOF. The AFR says that’s around 6% of total advisor numbers at both companies.
IOOF shares rose more than 2.7% yesterday to $3.73, NAB shares were up 0.9% to $23.55.
