Suncorp has sold its funds management business Tyndall Investments to Nikko Asset Management for $128.5 million.

The Japanese fund manager will pay Suncorp $80 million in cash, a $5 million access fee and a $30 million option payment in three years time. It will also pay $13.5 million for employee equity interests.

Suncorp has about $18 billion of funds managed by Tyndall and this arrangement will continue with Nikko.

It has also committed to pay Nikko a minimum level of fees during the next three years, with the option to extend the agreement for a further three years.

Suncorp Life CEO Geoff Summerhayes says the sale is part of the company’s move to simplify the business.

“Our strategic review concluded that Suncorp Life was not the natural owner of an investment management business,” he told insuranceNEWS.com.au.

“This transaction continues the simplification of the life business which will see us focus on life insurance complemented by superannuation and investments.”

In the last financial year Tyndall generated a net profit after tax of $10.2 million and the sale represents a multiple of 12.6 times the 2010 profit.

Suncorp is expected to write down $85 million of goodwill with the sale leading to a reported loss on the sale after tax of about $30 million.

Tyndall has a history of being sold. In 1999 Guinness Peat Group sold it to Royal & SunAlliance, which subsequently became Promina after a public float. Promina was then taken over by Suncorp in 2007.