MMC, the Auckland-based administration and consulting firm, has acquired about half of the equity in Brisbane-based super fund administrator IFAA. MMC says it is a “passive” investment and that future technological synergies will flow both ways across the Tasman.
IFAA is well known in the Australian super industry for its bespoke personal service for members, compared with its larger competitors, Link Group and Mercer. IFAA has tended to concentrate on medium-to-small super funds. With its new big shareholder, it is now looking to go up the scale and offer its technology and personal service to larger funds in Australia, according to founder and managing director, Neil Harvey. It would also be rolling out its services to the retail and corporate super sectors and the broader investment platform market, he said.
Harvey said that there are many opportunities in the Australian financial services market for an alternative provider. The strength of IFAA is its collective client focus and willingness to tailor solutions to individual client needs.
In a statement in NZ last Friday (March 6), Tom Reiher, MMC’s managing director, said: “Investing in the IFAA Group provides MMC with the opportunity to leverage our core technology platform, NeXus, into a new market. This will provide the Australian business with a superior technology solution, allowing our New Zealand clients access to the Australian market in future.” Reiher said.
MMC would also explore how IFAA’s “complementary capabilities” could bolster the firm’s NZ client offering “over time”.
IFAA has also developed some innovative technology offerings in recent years. Neil Harvey said last week that after moving to the Acurity admin system, IFAA had built some new technology around it to enhance the member experience. It had, for instance, developed the ‘Consolidator’ application – a multi-channel platform to simplify the scanning of Australian Taxation Office data and consolidation of members’ super accounts. The platform has gained interest from funds looking to bolster their growth and retention capability.
“Our competitors have limited capabilities in this area, dare I say. Our clients’ members can do a lot more by themselves on their preferred engagement channel. We have also introduced other new features over the past couple of years. We have ‘full interactive’ member statements, which MMC is particularly interested in introducing for their KiwiSaver clients.”
Harvey said: “We are not going to compromise our service. We look at having longer-term relationships with our clients and their members. Technology is important, and we invest a lot in it, but it should not replace people… If you phone IFAA a person will answer your call and the call is not concluded until all the member’s questions have been answered. Some other administrators may take a couple of days or more to get back to you.”
On completing the purchase, MMC executive chair, Robert Moss, and director, Philippa Weston, join the IFAA board. Weston is investment director with Pencarrow Private Equity, which owns half of MMC.
However, Reiher said the IFAA deal would not draw any other resources from the NZ business, which remains focused on local client needs and integrating the Aegis platform into MMC.
“We are currently engaged in transitioning across Aegis systems and staff and settling in a new chief executive officer, Vedran Babic, and are unwavering in our commitment to continue delivering the highest level of service to both our MMC clients and Aegis advisers,” Reiher said in the release.
MMC bought Aegis from ASB last October, completing the purchase in December. At the time Aegis reported funds under administration (FUA) of about NZ$16 billion.
After acquiring the platform, MMC has committed to upgrading the antiquated Aegis technology, including the addition of new front-end tools built by Auckland firm, Invsta. MMC holds a small equity stake in Invsta.
Including Aegis, MMC has almost NZ$80 billion in funds under administration held on behalf of more than 100 clients and 210,000 underlying investors.
IFAA also owns two other companies in addition to its core administration business.
The IFAA subsidiary Superannuation Compliance Services is a specialist consultancy business offering compliance, risk management, legislative research, internal audit and training to the super and advice industries. The parent group also runs Independent Professional Services, which provides executive management, company secretarial, administration, accounting and unit registry services to investment platforms.
– David Chaplin and Greg Bright