Diversified financial services company MMC Contrarian has agreed to sell its funds management unit, MMC Asset Management (MMCAM), to Valuestream Investment Management.
"Despite top quartile performance by MMCAM in the 2009 financial year, the market downturn and related fund outflows has resulted in a further decline in funds under management which no longer makes ownership of the funds management business cost effective," MMC said.
"MMCAM will report a loss for the 12 months ended 30 June 2009."
The divestment will result in the return of around $6 million of capital to MMC by the settlement of cash and inter-company loans, MMC said.
MMCAM managed an Australian Share Fund, Small Companies Fund and Value Growth Trust.
Under the deal, an investment management agreement has been struck between Valuestream and Huon Capital, which will see Huon become investment manager of the three products and MMC own a 10 per cent passive stake in Huon.
Valuestream is in the process of authorising Huon as a corporate authorised representative.
The decision to sell MMCAM allows MMC to focus on growing its financial planning subsidiary, ComCorp Financial Advice, MMC said.
"It further allows ComCorp to provide a robust and transparent structure for its financial planners and materially reduces any structural conflicts of interest through the ownership of both product and advice segments of the financial services value chain," the company said.
ComCorp recently bought a 40 per cent stake in Berry Financial Services, a financial planning practice owned by FPA chair Julie Berry.
ComCorp managing director Alex Hutchison said ComCorp purchased part of the regional New South Wales-based practice to cater for increased demand for advice in the region coming via its referral partners.
"Our strategy is to expand our services from the eastern seaboard across the country, however we're focused on quality before numbers and how practices will fit in with our referral partners," he said.
MMA's shares advanced 2.38 per cent to 43 cents at the close of trading on 17 July.
