Investor Group flags further acquisitions

INVESTOR Group has flagged the possibility of further acquisitions as part of its bid to make its Prescott brand a nationally recognised financial planning network after reporting a 56 per cent jump in its net profit for the past financial year.

Investor Group managing director Kevin White raised the possibility of further acquisitions to boost the group’s overall distribution capacity while announcing a record profit jump for the listed accounting and financial planning consolidator last week.

The announcement of the profit result followed news that Investor Group had added a fourth firm to the Prescott brand when it recently paid $9.55 million for Sydney-based Williams Hatchman and Kean (WHK).

Under the terms of the deal, WHK will use its financial planning business, WHK Financial Planning, to launch Investor Group’s Prescott brand in Sydney.

Prescott is currently only marketed in Adelaide and Melbourne.

The merger takes total funds under management at Investor Group to approximately $3.9 billion.

WHK operates a branded BT wrap service that will manage around $527 million once existing funds under management at Investor Group are added to the service.

The acquisition meets two of Investor Group’s three previously stated strategies to develop a national business brand for accounting and taxation services, make Prescott a nationally recognised brand, and develop individual regional member firms.

“We will also keep focused on the third pillar of growth strategy — the further strengthening of our well-established network of regional member firms in four Australian states and New Zealand,” White says.

The deal will also have a significant impact on growth at WHK, an accounting firm offering a range of advisory and financial planning services.

“We have a great opportunity to build on our base of more than 300 financial planning clients and funds under advice of approximately $210 million,” WHK chief executive Michael Manak says.

The deal marks the fourth financial planning acquisition for Investor Group, which earlier this year added Sanderson Blair and Accumulus to its Prescott business, which it purchased in September last year.

The record profit for Investor Group came largely on the back of a rise in its fee and commission income from $64.03 million in 2001 to $100.52 million in 2002.

The growth was spurred by a 106 per cent increase over the past 12 months in Investor Group’s financial planning revenue, which now accounts for 26 per cent of the group’s total fee income.

White says revenue from financial planning would be the mainstay of Investor Group’s growth going forward.

“Investor Group’s substantial financial planning base is expected to underpin strong and compounding income growth in future years, with revenue from business services also expected to show steady growth,” he says.