Snowball makes $5 million expansion
Snowball Financial will have exclusive access to 196,000 credit union members with a combined total of $530 million under advice after it paid $5 million to buy into two major financial planning operations.
In a significant expansion, Snowball has purchased Outlook Financial Planning - the advice arm of the Melbourne-based MECU credit union, and taken a 25 per cent stake in the financial planning division of the Queensland Teachers’ Credit Union (QTCU).
Outlook, which was founded in 1989 to service MECU’s 105,000, has $230 million under advice.
QTCU’s financial planning arm has over $300 million under advice from a total of 91,000 members.
As part of the deals, Snowball has secured exclusive rights to provide financial planning services to the members of the two credit unions for five years.
Snowball raised $3.4 million through the issue of 8,950,000 new shares at $0.38 each to help fund the acquisitions. It also used $1 million of its own cash reserves and borrowed a further $600,000.
Snowball managing director Tony McDonald said the deals were part of a well defined expansion strategy that revolved around the provision of advice to members of industry funds and credit unions, as well as the employees of large corporates.
“Our view has always been that with the introduction of choice of fund, one way or another every Australian was going to need advice,” he said.
“But the advice and distribution model was going to have to change to deliver adequate advice to Australians.”
Snowball has similar agreements to provide advice to employees of P&O, Patrick’s, Alcatel and the Maroondah Credit union in Queensland.
“We always thought that there were a number of member organisations…who were well placed to deliver advice,” McDonald said
“But the issue for them is what is the best way to deliver advice to their members.”
AUTHOR
George Liondis
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