How AMP went from surfing the SMSF wave to selling for a song

ANALYSIS

Between 2010 and 2018 AMP Limited built the self-managed superannuation funds (SMSF) business which became SuperConcepts spending well over $60 million to acquire its component parts.

Yesterday, AMP announced it was selling SuperConcepts for $8 million while booking a $7 million loss.

However, the establishment of the AMP SMSF business in 2012 reflected the general enthusiasm in the Australian financial services sector for self-managed superannuation as the fastest-growing segment of the superannuation industry.

Thus, AMP’s investor 2012 investor report spoke of the company establishing a new business unit named AMP SMSF which it said comprises Cavendish, acquired in July 2012, Multiport, Ascend and AMP’s 49% shareholding in SuperIQ.

Reflecting the level of the company’s enthusiasm for SMSFs. The investor report noted that SuperIQ had also recently acquired Smartsuper.

“The drivers for SMSF success are expected to be scale and efficiency in administration, developing advice capabilities, broadening distribution reach and packaging product solutions relevant to SMSF customers,” the investor report said.

The AMP growth strategy continued over the subsequent six years as it acquired other SMSF-related businesses including SuperConcepts ending in 2018 when it acquired MORE Super.

Thereafter, the picture became less rosy for AMP with SuperConcepts contributing just $35 million in revenue in the 2019 financial year, down by $8 million from the previous financial year – something which prompted the company’s then chief executive, Lara Bourguignon to describe 2019 as a year of major changes, requiring a reset in strategy towards consolidation and simplification.

“We faced into a number of legacy issues from the five years of mergers and acquisitions and announced a three-year plan for organic growth,” Bourguignon said at the time.

For the man heading up the PE-backed consortium which has acquired the SuperConcepts business, Matthew Rowe, it may prove to be a case of being twice-blessed by the failed growth plans of major institutions.

Rowe was the chief executive of accounting and financial planning outfit, CountPlus which acquired Count Financial from the Commonwealth Bank for a heavily indemnified song after the bank had climbed further into financial advice by paying $373 million for Count in August, 2011, only to sell it to CountPlus in 2019 for $2.5 million.

According to AMP’s last full-year financial results, SuperConcepts had $14,446,000,000 in assets under management in third quarter of last year which had declined to $14,441,000,000 in the fourth quarter.

The sale of the SuperConcepts business had been on the cards for at least a year with AMP chief executive, Alexis George describing it “as yet another step in simplifying the AMP business and delivering on the promises to focus on retail banking and wealth management”.

For Rowe and his backers the acquisition of SuperConcepts represents a chance to again prove that some businesses thrive best outside of an institutional environment.