The Suncorp Group Ltd (ASX: SUN) share price is up more than 1% after announcing the sale of its Australian wealth business.
What’s the sale?
Suncorp is selling its wealth business, Suncorp Portfolio Services, to LGIAsuper. This sale follows a strategic review which started in February 2020.
The financial business believes the sale is a good outcome for Suncorp’s 137,000 superannuation members and would continue the simplification of the overall business.
Suncorp thinks that after engaging with a number of potential purchasers, it’s LGIAsuper which is best placed to deliver sustainable member outcomes. The transaction will enable the combined LGIAsuper business to take advantage of size and scale benefits.
LGIAsuper is working towards another merger with Queensland-based fund Energy Super. This combined business will have about $28 billion in funds under administration (FUA).
The total consideration is estimated at around $45 million, which includes a fixed $26.6 million plus regulatory capital. After separation and transaction costs, the impact on profit is expected to be broadly neutral.
Suncorp estimated that there will be approximately $14 million of pre-tax annualised ‘stranded’ costs as a result of the sale. These will be offset by transitional service fees during FY22 and FY23 and will be removed from the cost base by the end of FY23.
