The co-owners of financial planning business State Super Financial Services are seeking to sell it, with price hopes understood to be around $280 million.
State Super Financial Services (SSFS) is majority owned by State Super trustee, SAS Trustee Corporation, with Canberra-based Australian Reward Investment Alliance holding a 22.5 per cent stake.
ARIA’s stake is valued within its private equity portfolio at about $60 million, and State Super’s valuation is thought to be proportionally in line with that.
The business comprises just under 100 planners, all salaried, with approximately 42,000 clients and $6.5 billion under management. The business has a captive client base in the two owner funds’ large defined benefit membership, all public servants set to enjoy generous pensions, and generated $43 million EBIT in 2008.
Bruce McLennan, the managing director of Gresham Advisory Partners, has been retained to sell the business and has been contacting potential buyers, including the big banks. About eighteen months ago, Gresham prepared a report for State Super on the options available regarding its financial planning business.The large weighting of SSFS within the fund’s private equity portfolio was understood to be a concern.
It is understood neither owner had made a final decision to sell SSFS, but both agree its potential is limited under the current arrangement given State Super is closed, as are ARIA’s defined benefit sections, which house over 70 per cent of its 340,000 members.
It is understood that part of the strategic thinking behind a sale is to make a broader spectrum of advice options available to State Super and ARIA members. SSFS is a full-service advice channel not set up to provide discrete, inter-product ‘limited advice’ to members, for example. Its adviser fees are bundled into the cost of a set range of investment fund and allocated pension products.
It’s understood the vendors of SSFS will continue to offer any buyer a level of exclusive access to their memberships.
The chair of State Super, Don Russell, confirmed a sale process was underway but would not comment further.