Melbourne-based PSC Insurance Group has put a value of $7.7 million on the Western Australian arm of Australian Reliance, after announcing today it was buying the insurance broking group in multiple phases.
ASX-listed PSC said it had completed the purchase of 70 per cent of AR (WA) Pty Ltd and its subsidiary entity Reliance Workplace Solutions from Perth-based Australian Reliance.
PSC said the purchase price was $7.7 million for the shares and $1.35 million for loan assets.
It added that the “consideration on completion” would be $5.01 million for the shares, but did not explain how it arrived at that figure.
The anticipated annual revenue from the purchased business was $5.5 million on a 100 per cent basis.
Today’s update followed the announcement two weeks ago that PSC had agreed to pay $31.57 million for Reliance Group, which owns the Australian Reliance corporate insurance broking business and a network of 33 franchise operations.
PSC also disclosed today that AR (WA) Pty Ltd was not an Australian financial services licence (AFSL) holder and that it would operate as a corporate authorised representative of an existing AFSL holder in the PSC group.
This followed the revelation last month that two unnamed AFSL holders within Reliance Group may have failed to comply with their legal obligations.
PSC said it planned to buy the business assets and trading companies of the AFSL holders but not the licencee entities, “and on that basis will not inherit any failure by them to comply with their obligations as a licensee".
The sale of Reliance Group comes after its founders, Andrew Donnelly and Kim Hanson, appear to have lost control of parent company Vantage Holdings Group to investor Jon Fogarty and his boardroom allies.
PSC said today it would continue to complete the overall Reliance Group purchase in stages as conditions were achieved.
The overall purchase included 70 per cent of the Perth broking operation, 60 per cent of Brisbane, 66 per cent of Melbourne and 100 per cent of Sydney.
It also encompassed 100 per cent of Reliance Franchise Partners and 50 to 100 per cent of 33 franchise entities.
That includes 13 franchises in WA.
In addition, PSC will buy a book of loans from Franchise Partners and parent company Australian Reliance.
