COG Financial Services (ASX: COG) has acquired salary packaging business, Paywise and the simultaneous partial divestment of its FleetNetwork business to EML Group.
COG is Australia’s largest asset financing and aggregation group with an estimated 21% market share of broker originated asset finance lending. COG has two main lines of business: finance broking and aggregation to SME’s; and funds management and lending. This creates a truly diversified financial services business.
The EML Group is a partnership between Employers Mutual Limited (an Australian owned mutual) and ASWIG Management Pty Limited. Since 1910, the EML Group has provided a range of products encompassing workers’ compensation, general insurance, and life insurance claims management.
Cameron McCullagh, Executive Director of COG, is Executive Chairman of ASWIG and was excluded from the negotiations on the basis of this conflict and has not voted on any COG resolutions in relation to the transaction. Each of the partners in the EML Group will contribute $7.5 million.
The rationale for the simultaneous acquisition and partial divestment transaction is to allow COG to expand its novated lease offering to salary packaging while simultaneously partnering with an established organisation that has been engaged for many decades in the provision of services to employers and their staff.
The acquisition marks a particularly strong growth period for COG, having completed 4 acquisitions across the asset finance broking and aggregation, insurance broking and novated leasing sectors since January 2022.
COG CEO Andrew Bennett said that the acquisition is consistent with its strategy to leverage its strong and significant broker market share in the asset finance space to expand cross selling opportunities, especially in its novated lease and salary packaging offerings.
“The acquisition of Paywise, a high-quality group, makes a lot of strategic sense to COG as it complements our growing novated lease and salary packaging services to our government and private sector customers around Australia and gives COG additional exposure to the rapidly growing electric vehicle sector.
“Paywise also brings to COG a very sophisticated technology platform that will over time be embedded across our network of businesses.
Mr Bennett added that EML Group’s acquisition of a strategic stake in the consolidated FleetNetwork business will open up a whole new market for COG’s financial services and will specifically enable COG to participate in larger government tenders for novated leasing services.
The EML Group and its subsidiaries are currently contracted to provide claims management services to government agencies in NSW, Victoria, South Australia, Western Australia, and the Australian Capital Territory.
COG’s novated leasing products are primarily focused on governments and larger corporates, complementing its exposure to the SME sector in Australia via its finance broking and aggregation businesses.