WT Financial Group has entered into a purchase agreement to acquire Millennium3 Financial Services from Insignia.
In an ASX announcement on Tuesday morning, WT Financial said it has agreed to purchase 100 per cent of the issued capital of Millennium3, with the deal set to be completed by mid-December.
WT Financial will purchase Millennium3 for $2.01 million on a debt free, cash-free basis, adding that the final purchase price would be adjusted at completion to reflect any retained working capital.
It also said that it intends to fund the acquisition of the Millennium3 network, which includes more than 140 wealth and personal risk insurance advisers operating in more than 75 privately-owned practices across Australia, using cash at hand.
“The acquisition represents a significant opportunity to continue to leverage our robust and scalable infrastructure for the benefit of the advice practices we support. WTL presents as an ideal home for M3 advisers – one where we believe they can and will flourish,” said WT Financial chief executive Keith Cullen.
“We’re delighted at the opportunity to retain M3’s talented frontline support staff and regional managers who we believe will add significant value to our group. We’re delighted, too, that outgoing M3 CEO Helen Blackford has agreed to remain for a transition period to support the integration of M3 into WTL’s operational structure.”
Based on WT Financial’s modelling, the business said it expects the acquisition to contribute more than $50 million of revenue, around $4.5 million of gross profit, and more than $500,000 of net profit before tax to the group on an annualised basis.
The Millennium3 network would also boost WT Financial’s funds under administration by around $5 billion to a total of $23 billion, while also adding $150 million of in-force risk insurance premium for a total of $470 million.
Mr Cullen added that there would be a relatively seamless transition and minimal disruption for Millennium3 advisers and their clients.
“The M3 fee structure closely aligns with the structures we operate across our existing cohorts on a net per practice and per adviser basis,” he said.
“Additionally, it includes a variable fee component, aligning our interests in helping practices grow their own revenue and profitability, which is our core focus at a time of unprecedented opportunity for advice professionals and advice network operators alike.”
Millennium3 contributed approximately $6.3 million of net revenue and made a pre-tax loss of $2.3 million in Insignia’s FY2023 reporting. The cost savings from the divestment were included in the $175–$190 million of annualised benefits announced in July 2023.
Commenting on the sale, Insignia Financial CEO Renato Mota said: “The sale of M3 marks another important milestone as we execute our strategy, creating a simpler, more sustainable advice offering, enabling greater growth focus for the future.
“WTL is highly aligned, has a longstanding working relationship with Insignia Financial and the sale is expected to result in positive outcomes for M3’s advice practices and their clients.
“Our advice strategy will enable us to focus on the growth of our Professional Services Advice businesses, Shadforth Financial Group and Bridges Financial Services, expanding the scope of advice through superannuation, and to leverage future opportunities presented by the government’s response to the Quality of Advice Review.”
Earlier this year, Insignia announced that it was “in discussions with interested parties” about the potential sale of the Millennium3 (M3) licence.
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