Praemium’s Mixed Results After OneVue Acquisition

Platform business Praemium has admitted to cash outflows following its acquisition of OneVue from Iress earlier this year, but says they were in line with expectations.

In a quarterly update filed with the Australian Securities Exchange (ASX), Praemium also confirmed outflows from Powerwrap related to a change in advisors.

However, the company’s overall message was positive, with total funds under administration (FUA) up 30% to $57.4 billion, while the Praemium Separately Managed Accounts business grew 18% to $11.3 billion.

The company said quarterly net outflows from Powerwrap were $437 million, down from $53 million in the prior-year quarter.

Commenting on the quarter, Praemium CEO Anthony Wamsteker said the June quarter showed that SMA continued to feel the impact of increased cross-selling across non-custodial VMA and VMAAS services.

He described the Praemium SMA program as the company’s core product and highest revenue margin service.

On OneVue, he noted that the company had increased its FUA by $4.1 billion at the time of the acquisition, which had declined to $4 billion as of June 30, but noted that net outflows were “broadly in line with expectations based on pre-acquisition due diligence and represented a $48 million improvement over the prior quarter.”

In context, Powerwrap said gross outflows from advisor switching were around $1 billion in the fiscal year, but the overall impact of net outflows over the past three quarters was in line with previously reported estimates.

“If there are no further changes to advisors, the situation is currently estimated to remain at a similar level for the next six months,” his statement said.

“Over the long term, Praemium and Powerwrap clients have traditionally grown their businesses at a rapid pace. This should mitigate the negative impact of changes that may result from known advisor exits.”