MMC has bought a major stake in a Brisbane-based superannuation fund administration firm.
The Auckland-headquartered MMC now owns about half of the IFAA Group as a passive investment with future technological synergies expected to flow both ways across the Tasman.
In a statement, Tom Reiher, MMC managing director, said “investing in the IFAA Group provides MMC with the opportunity to leverage our core technology platform, NeXus, into a new market”.
“This will provide the Australian business with a superior technology solution, allowing our New Zealand clients access to the Australian market in future,” Reiher said.
He said MMC would also explore how IFAA’s “complementary capabilities” could bolster the firm’s NZ client offering “over time”.
IFAA is well known in the Australian super industry for its bespoke personal service for members, compared with its larger competitors, Link Group and Mercer. IFAA has tended to concentrate on medium-to-small super funds. With its new big shareholder, it is now looking to go up the scale and offer its technology and personal service to larger funds in Australia, according to founder and managing director, Neil Harvey. It would also be rolling out its services to the retail and corporate super sectors and the broader investment platform market, he said.
Harvey said that there are many opportunities in the Australian financial services market for an alternative provider. The strength of IFAA is its collective client focus and willingness to tailor solutions to individual client needs.
IFAA has also developed some innovative technology offerings in recent years.
“Our clients’ members can do a lot more by themselves on their preferred engagement channel. We have also introduced other new features over the past couple of years. We have ‘full interactive’ member statements, which MMC is particularly interested in introducing for their KiwiSaver clients,” Harvey said.
“We are not going to compromise our service. We look at having longer-term relationships with our clients and their members. Technology is important, and we invest a lot in it, but it should not replace people…”
On completing the purchase, MMC executive chair, Robert Moss, and director, Philippa Weston, join the IFAA board. Weston is investment director with Pencarrow Private Equity, which owns half of MMC.
However, Reiher said the IFAA deal would not draw any other resources from the NZ business, which remains focused on local client needs and integrating the Aegis platform into MMC.
“We are currently engaged in transitioning across Aegis systems and staff and settling in a new chief executive officer, Vedran Babic, and are unwavering in our commitment to continue delivering the highest level of service to both our MMC clients and Aegis advisers,” Reiher said in the release.
He said MMC was close to appointing a new chief financial officer.
MMC bought Aegis from ASB last October, completing the purchase in December. At the time Aegis reported funds under administration (FUA) of about $16 billion.
After acquiring the platform, MMC has committed to upgrading the antiquated Aegis technology, including the addition of new front-end tools built by Auckland firm, Invsta. MMC holds a small equity stake of Invsta.
Including Aegis, MMC has almost $80 billion in FUA held on behalf of more than 100 clients and 210,000 underlying investors.
IFAA holds a number of companies in addition to its core administration business that targets small to medium Australian superannuation funds.
The IFAA subsidiary Superannuation Compliance Services is a specialist consultancy business offering compliance, risk management, legislative research, audit and training to the super industry. The parent group also runs Independent Professional Services, which provides executive management, administration and company secretariat functions.
IFAA founder, Harvey, has deep roots in the super fund administration business dating back to the now-defunct pioneering firm in the sector, Jacques Martin.
Produced in association with Greg Bright, publisher of Investor Strategy News (Australia)