IOOF Holdings Limited (ASX: IFL) has been embroiled in drama for more than a year now. Ever since the Royal Commission the financial services provider has been in the headlines for all the wrong reasons. Excoriated by the Commission for allegedly using superannuation members' funds improperly, IOOF saw its share price drop from highs of above $11 pre Commission to as low as $4.28.
IOOF lost its Chief Executive Chris Kelaher and Chairman George Venardos in quick succession as APRA sought to disqualify them from the superannuation industry. APRA alleged the executives had broken the law by failing to act in the best interests of superannuation clients.
Lately, however, things have started to turn IOOF's way. In September, the Federal Court ruled APRA had failed to prove its case against the executives and IOOF. IOOF's share price surged nearly 8% on the news, making its way to $5.99.
Also in September, IOOF completed the divestment of Ord Minnett for $125 million. The divestment formed part of IOOF's efforts to recalibrate the business and focus on core wealth management capabilities. IOOF's share price continued its rise on the news, finishing September up a total of 26% to sit at $6.39
Then this month came the news that IOOF had secured a $125 million discount on the purchase of ANZ's pensions and investments business. The deal, which was first inked back in 2017, had been thrown into doubt by the proceedings against IOOF by the prudential regulator.
Now back on (with revised terms), the acquisition is expected to complete in the first quarter of 2020 but first requires APRA approval. IOOF will be funding the acquisition, which originally had a purchase price of $975 million, with debt, so the discount will reduce the amount IOOF needs to borrow.
IOOF's share price surged again on news of the discount, gaining more than 10% over the course of the day to finish at $7.05. Currently trading around $7.60, IOOF has made steady progress on clawing back its losses since its disastrous showing at the Royal Commission. All this good news begs the question, is the worst over for IOOF?
Green shoots were apparent in IOOF's FY19 results. Net inflows to the advice business were $520 million and inflows to the platform were $1.4 billion. Underlying NPAT was up 3.4% to $198 million. A full year dividend of 44.5 cents per share was paid, with IOOF currently yielding nearly 5%.
Foolish takeaway
IOOF suffered through an annus horribilis in FY19, but there are signs that its fortunes may be improving. The share price has yet to recover to its pre-Royal Commission highs, but it may not be out of reach if things go IOOF's way.
