Insignia Financial will sell its friendly society investment bond business, IOOF Ltd, to Australian Unity with the proceeds being utilised to further reduce net debt.

In an update to the ASX on Monday morning, Insignia announced both parties will also enter a strategic alliance agreement to support the mutual aim of providing financial wellbeing to all Australians.

The total paid consideration of the deal includes up to $40 million comprising, $36 million in cash upon completion. There is an additional contingent amount of up to $4 million payable 12 months after completion, subject to the transition of clients and funds under management (FUM).

The investment bond business is considered “adjacent” to Insignia Financial’s core strategic priorities, while IOOF Ltd’s policy holders are expected to benefit from joining Australian Unity.

Post-acquisition Australian Unity Group expects to have a total customer base of over 180,000, with more than $3.2 billion in FUM.

Insignia will provide a number of services to IOOF Ltd under a transitional services agreement for an initial period of 12 months.

IOOF Ltd is a friendly society under the Life Insurance Act 1995, providing a range of investment bonds including the WealthBuilder product suite and had approximately $1.1 billion of FUM as at 30 June 2023.

Completion of the transaction is subject to relevant regulator approvals.

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