Bank mulls acquisition of AIICO pensions

FCMB Group Plc has announced ongoing conversations for a potential acquisition of AIICO Pension Managers Limited by its subsidiary, FCMB Pension Managers Limited.




According to the statement obtained from the NSE, the deal will involve FCMB Pensions acquiring the 70 per cent stake held by AIICO Insurance Plc and 26 per cent of minority-controlled shares, thus bringing the cumulative sale of 96 per cent stake to be purchased by FCMB Pensions.



The statement signed by Donald Kanu, Company Secretary, AIICO Insurance Plc, noted that at the conclusion of the proposed sale, AIICO Pensions shall cease to be a subsidiary of AIICO Insurance Plc.



The proposed transaction is subject to the approvals of the National Pension Commission and the Federal Competition and Consumer Protection Commission.



Reacting to the development, analysts at CardinalStone Research said: “We view the potential acquisition as a positive move; a statement of intent from FCMB’s management to leverage on its non-banking businesses to drive overall profitability.



“Broadly, we expect the proposed acquisition to have the following impact on FCMB, acquiring AIICO Pension’s N124 billion funds under management could lead to a consolidated AUM of N447.7 billion for FCMB Pensions, a 38.0 per cent increase compared to its position as at Q1’20.



“The expected increase in pension AUM is likely to support FCMB’s fee income. This support is likely to offset the impact of PENCOM’s revised fee structure for the industry, which could potentially shave off 7.8 per cent of asset management fees assuming a flat AUM. We see scope for a 13.6 per cent to 26.2 per cent increase in Asset Management fees as a result of the inorganic expansion alone.



“With both firms likely to continue operating as standalone entities, it is unlikely that the deal will lead to significant cost synergies as most cost centre activities could still be duplicated. However, the opportunity to cross-sell to an expanded clientele base suggests that the move could be positive for revenue.”



Shareholders of FCMB Group Plc had recently approved the payment of a cash dividend of 14 kobo per ordinary share, which translates to N2.77 billion, for the year ended December 31, 2019.






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