Despite being a growing reservoir of funds under management, this critically important pool of capital is confronting mounting problems collating and disseminating key data in a timely manner.
The ratings house is pinning its growth strategy on a revamped methodology that increases the emphasis on governance to 25 per cent – a timely move considering APRA’s proposed reforms.
Diversa takes a big step up with acquisitions
(Pictured: Stuart Korchinski)
Diversa Ltd, the listed boutique trustee and superannuation administration business, has cemented funding to allow for a big step up in scale and capabilities through two takeovers to be transitioned over the next few months.
Diversa has raised $3.04 million through a placement which was led by the advisory firm of one of its directors, Stephen Bizzell, and also secured a loan facility of $2.65 million. The funding will allow for the complete takeover of The Trust Company, formerly owned by Perpetual, and 30 per cent of Tranzact Financial Services, another diversified financial services boutique. Diversa also has an option on the other 70 per cent of Tranzact.
Stuart Korchinski, Diversa chairman, said that when the transactions were complete, including the full takeover of Tranzact, the company would be profitable and have an estimated annual revenue of $12 million.
“This significantly changes Diversa’s financial position and balance sheet,” he said.
Korchinski, a former chief executive of Link’s Australian Administration Service, took over as chief executive of Diversa in 2009. He subsequently recruited experienced fund manager Vince Parrott, who is the current chief executive, and has recently adopted a non-executive chairman’s role.
Korchinski said last week that the company would continue with its strategy to build scale in the superannuation services field and would benefit from a continued increase in interest in separately managed accounts.
The Trust Company takeover adds $3.1 billion to the company’s $1.1 billion in funds under trusteeship, and about $2.3 million in revenue through the addition of 15 client funds. Tranzact, which will eventually cost Diversa $9.7 million when it exercises its option of the outstanding 70 per cent, adds $208 million in funds under management through the Smartsave Members Choice Superannuation Plan.
Under the deal struck with Tranzact, Diversa is being guaranteed a return of $700,000 a year for its initial 30 per cent stake.
Diversa is adopting a strategy similar to that successfully executed by IOOF over the past several years – acquiring a range of service provider companies to the superannuation industry and putting them together to benefit from the combined scale.
Last year it acquired the LESF trustee and administration business, which had about $80 billion in its care, and the Melbourne-based CCSL third-party trustee and advice business which was founded by Mark Cerche.
Diversa also benefited from the APRA regulation which required ERF operators to reapply for their licence last year, with several deciding to get out of that business.
Big clients now include Praemium, ING, Virgin, Hub 24 and Power Wrap.
Diversa acquired a MySuper licence with the LESF purchase and has the opportunity to white label that fund for other advisors to use.
“It’s a client base that doesn’t want the hassle of running an SMSF,” Korchinski said. “They want advice and the ability to customize portfolios. We think this is a growing business.”
