Connie McKeage

OneVue Holdings Limited (OneVue) last week agreed to acquire Select Asset Management Limited, trading as Select Fund Services and Select Investment Partners Limited.

Select Fund Services (SAML) is a specialist provider of responsible entity (RE) services and one of Australia’s leading REs for multi-asset trusts. The business also provides services to leading single strategy managers and access to Australia via unit trust fiduciary services for global offshore groups.

Select Fund Services acts as RE for groups such as Neuberger Berman and Smarter Money Investments (50% owned by Yellow Brick Road) who are also clients of OneVue. It has a 12 year track record in fiduciary and RE services with a stable and experienced operations, technology and compliance team.

Select Investment Partners (SIPL) is a specialist multi-asset investment manager and implemented portfolio consultant with a track record of over 12 years managing diversified multi-asset portfolios. The business is based in Sydney with 15 people. SIPL works with financial planners to enable them to offer Customised Portfolios to their clients.

“The acquisition follows OneVue’s stated objective to grow the company organically and acquisitively and is strategically important in delivering value added services to both OneVue’s Fund Services and Platform Services’ clients“, said Connie Mckeage, CEO of OneVue.

The consideration for the Select businesses will be paid $2.7m in cash and $4.3m in OneVue scrip.There is also an incentive component, payable in scrip, for total revenue growth above an agreed threshold in Select Investment Partners during FY2015. Shares issued will have an escrow period of up to 12 months. The cash component will be funded from existing cash holdings.

Brendan Foley, Chairman and CEO of Select, said, “Having worked successfully with OneVue over the last year on a range of projects from unit registry and mFund services to the development of a managed account solution for our customised portfolio solutions, we have seen the complementary nature of our respective client lists and service offerings. By merging the businesses, the current value propositions for our respective clients will be enhanced.”

Select and OneVue are complementary businesses. SIPL strengthens OneVue’s superannuation trustee business, MAP Funds Management. SAML’s services enhance OneVue’s existing Fund Services offering by creating a broader suite of unit registry, RE services and mFund distribution.One of the cornerstones of the transaction is the strong cultural fit of the businesses, and that OneVue’s management capabilities are broadened and deepened.

The acquisition is expected to deliver a number of key financial benefits for OneVue:

• Retail Funds Under Management and Administration (FUMA) will increase from $1,940m to $2,609m (Excludes one asset consulting contract prior to the acquisition advised as winding up in Nov 2014)
• Total Funds under Supervision (FUS) from RE and trustee services will increase from $711m to $1,614m as at June 2014
• Select’s consolidated revenue was $7.1m in FY 2014. Revenue included incentive fees earned in the Investment Partners business of $1.6m and paid on returns in excess of a bank bill benchmark
• OneVue expects that the transaction will be accretive on an EBITDA per share basis in FY2015
• Revenue impact by offering RE services as part of a broader offering to domestic and international custodians and investment managers
• Cost and capital synergies identified

Select employees will join OneVue at their Sydney office. Brendan Foley, Chairman and Chief Executive Officer of Select, will be appointed Deputy CEO of OneVue and two other Select directors will be appointed to the executive team.

“This acquisition will enable us to more effectively deliver a broader range of client solutions. I welcome our new shareholders and I am delighted to be working with a team of people who are aligned with the OneVue team in their thinking and equally committed to making a difference” Connie Mckeage, CEO of OneVue, concluded.

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Alex Wise

Select Fund Services (Select) has made Neuberger Berman’s Absolute Return Multi Strategy (ARMS) investment capability available to Australian investors, including the retail and self-managed superannuation fund market (SMSF), with the launch of the Neuberger Berman ARMS Trust.

“ARMS is a liquid alternatives, multi strategy option that seeks absolute returns through an active allocation to a select group of established hedge fund managers, diversified across strategy types and geographies,” says Neuberger Berman Australia managing director Lucas Rooney.

“The Neuberger Berman ARMS Trust accesses the investment expertise of Neuberger Berman’s existing ARMS investment strategy which has proved popular in the US and Europe, raising over $1.6 billion in funds under management in the past two years. We believe that these hedge fund strategies can play an important diversification role in investment portfolios.”

Head of Fund Services at Select, Alex Wise, commented: “As responsible entity for the ARMS Trust, we are proud to be working with Neuberger Berman on the launch of this exciting new investment solution into the Australian market. We have been working with Neuberger Berman for over a year and have absolute confidence in them as market leaders in liquid alternative investments.

“The recent period of low volatility has reinforced a foreboding for many investors familiar with the inherent cyclicality of investment markets. Investors are increasingly searching for lower volatility investments that offer portfolio diversification with low correlations to equities and bonds, and ARMS has delivered on these objectives,” Mr Rooney says.

The ARMS investment strategy was first launched by Neuberger Berman in the United States in May 2012 and then in Europe in October 2013. ARMS is managed by Neuberger Berman’s experienced Hedge Fund Solutions team, comprising 40 individuals based in New York and London and which has been managing hedge fund solutions since 2002.

“Unlike traditional hedge fund investments, the Neuberger Berman ARMS Trust offers daily liquidity, with daily pricing, along with improved portfolio transparency, right down to the stock level. It also offers lower investment minimums than typical hedge funds,” Mr Rooney says.

“Because we invest ARMS’ assets in each underlying investment strategy via managed accounts, we have visibility on all underlying positions, which helps us to manage and control the risk as well as allowing us to share this high level of transparency with our clients.

“Importantly, our ARMS investment capability provides investors with access to ‘real’ hedge fund strategies, which we believe are run by quality active hedge fund managers, and not the ‘hedge-fund-lite’ replication versions, used by some liquid alternatives funds.

“With historically lower levels of volatility than equity markets, and a low beta to equities and bonds, the ARMS investment strategy provides investors with access to high quality hedge fund managers at lower fees than typical hedge fund investments (and with no performance fees at any level), by virtue of our almost unique combination of extensive hedge funds research and large mutual funds presence,” Mr Rooney says.

“We expect the Neuberger Berman ARMS Trust to be sought after as a differentiated source of risk management and return for Australian investors’ portfolios,” Mr Wise concludes.

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