If anyone would have suggested in December last year that the North platform would form the stumbling block that would bring down National Australia Bank’s (NAB) efforts to buy Axa Asia Pacific (Axa AP), they would have probably been labelled a flaming galah.
“It is a done deal” was the general consensus in the market at the time. Not even the Australian Competition and Consumer Commission’s (ACCC) February statement of issues could change minds.
But the regulator has formed the opinion that North is not just any platform.
North, combined with Axa AP’s Summit and Generations platforms under the Wealth.net technology, as is the plan, would make it a key competitor in the concentrated market that serves sophisticated and very wealthy investors.
If this market were to consolidate any further, a stagnation of system developments would be the likely result, the regulator argued.
It is a conclusion that has stunned even the most loyal supporter of the North platform.
It is true the system has been well received, partly thanks to its capital guarantee feature and partly because it has been developed from scratch, which makes it an easier system to integrate than many older systems.
It also experienced good inflows last year, representing many hundreds of millions of dollars of Axa AP’s new business over the year.
But revolutionary the platform is not.
Westpac-owned Asgard, for example, is also seeking to integrate its various platforms into one system and has signalled it would be adding capital protection to its system features too.
Yet, North has become the focal point in the struggle for Axa AP.
It seems that a sale and lease back arrangement of North is one of the few options open to NAB to please the regulator, after the bank declared on Wednesday it would not sell Aviva’s Navigator platform.
After all, seeking a legal option by contesting the ACCC decision in court would not fit in with the six-week deadline set by Axa AP’s French parent, Axa SA, for getting regulatory approval.
But in selling North, NAB faces several problems. Finding a potential buyer might prove to be difficult as its arch rival in the battle for Axa AP, AMP, is the only financial services player of scale without a platform.
NAB could look for a candidate in the IT sector, or even among private equity firms, but negotiating a commercially acceptable deal would be difficult, as everyone knows they would have to get rid of it.
Meanwhile, AMP has been in discussions with Axa SA ever since NAB launched its bid.
A successful sale of Axa AP now seems to depend on AMP chief executive Craig Dunn’s persuasive powers to convince Axa AP chairman Rick Allert that what it offers is a fair price.
