The IOOF Holdings Ltd (ASX: IFL) share price has fallen 2.5% lower this morning after an update on its acquisition of Australia and New Zealand Banking Group (ASX: ANZ) owned OnePath Pensions & Investments (P&I).
What did IOOF announce to the market?
IOOF said that it had been working with ANZ towards completion of the P&I acquisition including:
- The completion of the successor funds transfer (SFT) to separate the ANZ P&I business products from OnePath Life which was a condition of transaction completion.
- Completion of the transaction remains conditional on the receipt of notices from OnePath custodians (OPC) and ANZ that each has no objection to the acquisition proceeding.
- Relevant APRA approvals regarding new superannuation regulation from 5 July 2019 which may also become a condition of completion.
If any of the outstanding conditions are not satisfied by 17 October, either IOOF or ANZ may terminate their end of the bargain.
I think investors are wary of the change in tone in today's announcement and the potential for non-completion given the requirement for ANZ, OPC and APRA approval of the transaction before 17 October 2019 and this has been reflected in this morning's share price slump.
Should you buy IOOF shares?
In my view, I think there's too much risk in the wealth management space largely from the looming mountain of potential class actions and the change of government in the coming months.
The regulatory risk remains an ever-present threat to the banking sector, particularly if a Labor and/or Greens government comes into power and could look at further reforms in the sector.
There's been a big influx of offshore money to fund potential class actions arising from the Royal Commission and particularly around the issue of shareholder value destruction, which could have a domino effect if one of those manages to gain a big payout.
While there is a strong argument that there has been an overreaction amongst the ASX wealth managers, and particularly IOOF and AMP Limited (ASX: AMP), I would rather keep my powder dry and wait for a less complicated value play.
