EQT resolves Wealthpac sale price dispute

The longstanding legal dispute between Equity Trustees Limited (EQT) and the vendors of the Wealthpac Master Fund has been resolved.

The dispute over the method for calculating the final amount payable for the superannuation business has been ongoing since its acquisition by the Melbourne-based fund manager EQT in March 2003.

The total payment to the vendors has now been agreed at $17.6 million (including previous payments), according to Equity Trustees managing director, Peter Williams.

This amount will be capitalised as part of the investment, and, therefore, have no impact on the EQT group’s net assets, Williams said yesterday.

It was reported in Money Management last year that the disputed amount was estimated at $10 million, contingent on such factors as market movements, business profitability and funds growth over the remainder of the year.

However, Williams had always declined to officially reveal the total purchase price of the master trust, citing the impact of these contingencies.

The deal reportedly involved a series of three tranche payments incorporating a mix of cash and EQT shares, with an initial payment representing 2.5 per cent of funds under management (FUM), comprising $1.25 million cash and $1.25 million in shares.

Wealthpac was acquired by EQT in totality, including its administration systems, staff, business development, relationship management and compliance.

At the time of acquisition the trust had 7,600 members and was comprised of employer superannuation, a group insurance pool, a pooled super trust and a public eligible rollover fund.

Williams said yesterday that the dispute had no adverse impact on the Wealthpac business, which “continued to operate very successfully” since acquisition.

“FUM growth over the past three years has risen from $103 million to approximately $370 million, with the profit earned on that FUM continuing to represent an important component of the overall EQT business.

“In addition, prospects for its future revenue streams are especially good in the context of the growth of superannuation in Australia.”

Williams added that it was “planned that Wealthpac chief executive Robert Dillon will have ongoing involvement in the business”.

Dillon was previously chief executive of Wealthpac before its acquisition by EQT, which occurred barely a month after Williams was appointed managing director in February 2003.