BT investors to win from Westpac acquisition
Westpac’sacquisition of BT Financial Group should be a minor boon to investors withBT Funds Management(BTFM), but investors atSagitta Wealth Managementcould face a period of disruption while management issues are resolved.
These were the key messages in the latest report into both BTFM and Sagitta by ratings agencyMorningstar, which today rated BTFM as a ‘poor quality’ fund manager with two stars, and Sagitta a relatively ‘good quality’ manager with three stars out of a possible five - reaffirming its previous ratings for both groups.
According to the report, investors with BTFM should benefit by Westpac’s decision to outsource BT’s international equities investments to an external manager. Investors will also have access to a wider product range, including multi-manager and multi-style funds, as a result of the acquisition.
However, Sagitta investors will experience a period of disruption following staff changes at the group, Morningstar says.
Peter Martin, the chief executive of Sagitta, which Westpac purchased for $323 million only four months ago, has announced that he is not continuing with the group. John Tuxworth, the managing director of distribution and service at Sagitta, will also not continue with the group after Westpac’s acquisition of BT.
According to Morningstar, the Sagitta and Westpac investment teams have already been partially integrated, and now report to Sagitta’s Guy Strapp, who says the Sagitta investment team should stay largely intact following the merger.
But he says BTFM investment staff will need to prove their merit in order to be included within the merged team.
“The ownership uncertainty for BTFM fund investors has finally been resolved, with the acquisition of a stable and supportive parent,” the report says. “Clearly, Principal finally lost patience with BTFM, after buying it for $2.1 billion in August 1999, preferring instead to crystallise a loss now of over $1 billion.”
Westpac’s fund management business will be divided into two arms for investment management and asset accumulation, and managed by Westpac’s David Clarke as chief executive officer. Sagitta’s Strapp has taken on the role of head of investments unit, while BTFM’s Rob Coombe will head asset accumulation at the merged entity.
One of the challenges facing these managers will be to integrate three separate back office functions into a single working unit - a process that could take up to 18 months, according to Morningstar.
Recommended for you
ASIC has released the results of its first adviser exam to be held in 2025, with 241 candidates attempting the test.
Quarterly Wealth Data analysis has uncovered positive improvements in financial adviser numbers compared with losses in the prior corresponding period.
Holding portfolios that are too complex or personalised can be a detractor for acquirers of financial advice firms as they require too much effort to maintain post-acquisition.
As the financial advice profession continues to wait on further DBFO legislation, industry commentators have encouraged advisers to act now in driving practice efficiency.
