Listed financial services firm Snowball Group (Snowball) plans to make further acquisitions as the group anticipates it will be in a strong cash position following the merger with Shadforths Financial Group (Shadforths).
“Our balance sheet, particularly with the strength of the Shadforth balance sheet coming and cash they have on their balance sheet, puts us in a unique place to really drive sensible, mature, non-knee jerk reaction selective consolidation in the industry going forward,” Snowball managing director Tony McDonald said.
Shadforths chief executive Tony Fenning said the merger would enable the combined group to take advantage of consolidation opportunities.
“We think that the way that things have panned [out] with the consolidation you’ve really got a small number of very big players who are just enormous and find it hard to focus on the advice business because they have so many other businesses,” Fenning said.
“Then you’ve still got the small operators and we want to position ourselves as someone advisers can attach themselves to with all the infrastructure to compete against the big guys.”
McDonald said the key drivers behind the merger is clients and scale.
“You’ve got to have the scale to drive for the efficiencies, you’ve got to have the scale to extract competitive rates from input suppliers, you’ve got to be able to meet the new regulatory requirements. We all know that scale is the key driver of value for the client,” he said.
“The coming together of Shadforth and Snowball is absolutely ticking the box on delivering scale which equates to value to the client.”
In a statement to the Australian Securities Exchange, Snowball said the combined Snowball and Shadforths group would form a privately-owned wealth management business with more than $14.3 billion in funds under advice, administration and management.
Under the new merged structure, McDonald would hold the positions of executive director and group chief executive while Fenning will be the new group’s managing director.
In terms of branding, it is expected that the Shadforths, Outlook, Western Pacific brands will remain though the company’s holding name, Snowball Group, may be re-branded.
“We’ve been looking at the Snowball name as to whether it’s the best for us going forward in any event and this is a nice catalyst for us to have a re-think about it, but that’s only for the parent company. The advice brands will stay,” McDonald said.
A bidders and targets statement will be despatched to Shadforth shareholders on 6 June 2011.
