Growing FUM sees GDG set to take all of Lonsec

Generation Development Group (GDG) went into a trading halt on the Australian Securities Exchange (ASX) early yesterday in the wake of newspaper reports that it was intending to acquire the whole of research and ratings house, Lonsec.

If GDG proceeds as expected, then it will end the nearly 14 years of involvement of Mark Carnegie who led the acquisition of Lonsec by Financial Research Holdings back in June, 2011.

There will also be a certain symmetry to such a GDG move in circumstances where it is the parent of insurer Generation Life and where Lonsec was previously owned by major global life insurer, Zurich.

But a lot of things have changed since June 2011 when Lonsec was a stockbroking and research business. GDG’s interest in Lonsec is very much focused on its managed accounts business.

GDG currently holds 49.2% of Lonsec Holdings after announcing a $20 million investment in the business in September 2020 and then growing its presence in the company from 40.7% in March, last year.

GDG highlighted to the Australian Securities Exchange (ASX) last month that Lonsec Investment Solutions had continued to achieve strong growth, with $10.4 billion in Funds Under Management at March, 2024.

It said there had been a significant, 27%, increase in FUM since 31 March, last year./

At the time of the 2020 investment, GDG noted Lonsec’s strategy focused on building an investment solutions business around burgeoning demand for managed accounts.

The same investor briefing spoke of potential merger and acquisition opportunities including managed account providers and research organisations providing data services to the wealth management industry.

Much has changed in the both the research and ratings and managed accounts sector since 2020, including that one of Lonsec’s more significant competitors, Zenith Investment Partners, is now owned by UK-based funds management data aggregator, FEfundinfo.

Three of Australia’s four leading research and ratings houses, Morningstar, Lonsec and Zenith, have managed accounts businesses.