The National Bank has sold its troubled funds management arm Southpac Investment Management (SIML), which has $1.4 billion under management, to AMP Investments (AMPI) for an undisclosed sum.
In the past couple of years SIML has fallen from its position as being the king of the wholesale funds management industry, and it has experienced heavy outflows of funds from its retail business quarter after quarter.
The sale does not effect fellow subsidiary National Bank Financial Services which distributes funds managed by Southpac in the retail market. It will continue to sell National Bank branded products, but these funds will now be managed by AMPI.
NBNZ says it sold SIML as funds management is not considered part of its core business, while AMPI bought the business to increase the size and efficiencies of its operations.
Greville says "it's no secret that we have been seeking to grow by acquisition and SIML gives us an excellent growth opportunity."
He says if a business is committed to this industry it needs to have the appropriate economies of scale. This is being illustrated all around the world as financial service businesses, large and small, merge or seek strategic alliances.
This deal takes AMPI's funds under management to $8.2 billion and adds another 13,000 retail investors to its customer base.
"What we are doing here is participating in the rationalisation of the industry," Greville says.
Neither party will disclose the sale price, however NBNZ corporate affairs manager Cynthia Brophy says there were a number of tenders from interested parties.
AMPI managing director Roger Greville says the SIML business is a good fit as both firms are heavily involved in passive management.
About a year ago SIML moved away from active management to a passive style, while AMPI has its New Zealand equities Tracker and its listed international passive fund WiNZ.
The National Bank has sold its troubled funds management arm Southpac Investment Management (SIML), which has $1.4 billion under management, to AMP Investments (AMPI) for an undisclosed sum.