MMC-developed investment administration and wealth management technology might be exported offshore following its recently confirmed takeover by the Bermuda-based Apex group.
Peter Hughes, Apex chief, said MMC “has a sophisticated technology offering which can enhance some of our client experiences in other locations like Australia”.
Hughes said MMC offered attractive growth opportunities in both the investment administration and wealth management sectors – the latter a fresh addition to the Apex toolkit.
“The wealth administration product is new for us and we would hope to expand it outside of New Zealand,” he said.
Previously known as Aegis, MMC bought the pioneering NZ investment platform in 2019 from ASB, later upgrading the technology to a modern cloud-based existence.
The MMC wealth platform also brings Apex into the same competitive space as the NZ-founded, now global, investment admin giant, FNZ, for the first time.
“We consider FNZ to be more in the wealth administration space so we don’t compete at the moment other than in New Zealand,” Hughes said.
But he said the MMC purchase, which followed closely on the back of the Apex buyout of Australian investment admin firm Mainstream last year, will involve a few technological changes – and a rebranding at some point – as the business joins the global group.
“We always looks to integrate the businesses [Apex buys] to ensure that we have one cohesive infrastructure and as we do this we look to obtain synergies through economies of scale, particularly surrounding systems and technology. In addition, we anticipate being able to expand the product suite and geographical servicing for clients to ensure they are receiving all the services they require,” Hughes said.
Apex would bring services such as digital banking, international compliance technology as well as environmental, social and governance (ESG) ratings and advice.
“We do not plan to make any management changes but we will be integrating the systems into the wider Apex infrastructure where it is complementary to our client and staff experiences,” he said. “Given our experience of integrating over 25 acquisitions in less than four years, we are confident of integrating the MMC acquisition with minimal disruption to clients or employees. We are focused on enhancing client experiences as we integrate businesses and are proud that Apex has not lost a client based on an integration decision.”
The deal may also see the MMC Australian subsidiary, IFAA, bolted on to Mainstream.
“We acknowledge that the superannuation business within Australia benefits from scale, and as such combining both businesses [Mainstream and IFAA] will allow the combined entity to deliver a greater diversity of services to clients and enhance its growth prospects,” Hughes said.
Despite the intense buying spree over the last few years he said Apex was still pursuing more opportunities in the low-margin, high-volume investment administration business.
“The [investment admin] market remains highly fragmented, particularly in the North America region and we see further scope for consolidation as client increasingly seek a relationship with a single provider that can offer all the services they need, in all geographies, under one roof,” Hughes said.
But, for now at least, Apex has probably exhausted its options in Australasia.
“Given the sizeable acquisitions of Mainstream and MMC in recent months, our immediate focus in Australia and NZ will be integration and organic growth of these businesses,” he said.
In October last year Apex completed a A$410 million purchase of Mainstream, which reported about A$300 billion in funds under administration at the time.
MMC has about $100 billion under administration. Apex did not disclose the MMC purchase price but, assuming similar multiples as the Mainstream deal, it would have been in the order of $140 million – although industry sources suggest a higher figure.
Hughes said Apex, which now has over US$1.5 trillion under administration, had identified MMC as a potential takeover target several years ago before making an offer just after Christmas last year.
“Our M&A thesis involves expanding our product or geography suite and post our recent acquisition in Australia it was only natural to look to expand further in New Zealand,” he said. “We have followed MMC’s growth since initially approaching them in 2018 and were extremely interested when an opportunity arose to buy the business.”
The purchase was subject to Overseas Investment Office approval.