Nikko AM agrees to buy Tyndall Investments from Suncorp
Nov. 16 (BusinessDesk) – Nikko Asset Management, the Tokyo-based investment firm, has agreed to acquire Tyndall Investments from Suncorp-Metway Ltd., adding about A$25 billion of managed assets in Australia and New Zealand.
Nikko will pay A$80 million in cash upfront as part of a total package that may add up to A$128.5 million to acquire Tyndall, lifting its total funds under management to US$145 billion. The deal will increase its exposure to the Australian mutual funds market, which at A$1.25 trillion is the world’s fourth largest, Nikko said in a statement.
“Australia is a key component of our strategy of expansion across Asia,” said Charles Beazley, head of international and institutional businesses at Nikko.
Shares of Suncorp were little changed at A$9.39 on the ASX and have gained 17% in the past three months. Tyndall has 63 staff in Australia and New Zealand. It is the 15th-largest fund manager in Australia and ranks fifth in New Zealand, according to the statement.
The total purchase price may amount to A$128.5 million, including A$80 million upfront cash to Suncorp, a A$5 million access fee, a A$30 million option payment in three years time, and A$13.5 million for employee equity interests, according to a separate Suncorp statement to the ASX.
Suncorp will remain Tyndall’s major client, with some A$18 billion of Suncorp directed funds continuing to be managed by Tyndall.
On a normalised basis, Tyndall Investments generated a profit of A$10.3 million in 2010 and the sale price implies a multiple of 12.6 times earnings, it said. As a result of a writedown of allocated goodwill, though, the current year reported loss on sale after tax would be about A$30 million. If the option is exercised, Suncorp would recoup after-tax profit of A$21 million in year three, it said.