SYDNEY, AUSTRALIA: Insignia Financial Ltd (ASX: IFL), a financial services company, has announced that it has agreed to sell its investment bond business to Australian Unity Ltd (ASX: AYU), a mutual organisation, for up to $40 million.
The deal involves the divestment of IOOF Ltd, a friendly society that provides a range of investment bonds, including the WealthBuilder product suite. IOOF Ltd had approximately $1.1 billion of funds under management (FUM) as at 30 June 2023.
Insignia Financial will receive $36 million in cash upon completion of the transaction, plus an additional contingent amount of up to $4 million payable 12 months after completion, subject to the transition of clients and FUM to Australian Unity.
The transaction is subject to relevant regulator approvals and is expected to be completed by the end of the year.
Insignia Financial said that the sale will allow it to focus on its core strategic priorities, while IOOF Ltd’s policy holders will benefit from joining Australian Unity, which is committed to growing and investing in the investment bond sector.
Insignia Financial will also provide a number of services to IOOF Ltd under a transitional services agreement for an initial period of 12 months. In addition, Insignia Financial and Australian Unity will enter a strategic alliance agreement, to support their mutual aim of providing financial wellbeing to all Australians.
The proceeds from the sale will be used to reduce Insignia Financial’s net debt.