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- Portfolio management company Hub24 (HUB) has initiated three acquisitions and a $60 million placement
- Hub24 has put in a $60 million offer to buy rival Xplore Wealth (XPL), in a deal that has seen Xplore Directors recommend the offer
- The company is also looking at purchasing Ord Minnett’s non- custody portfolio service, Portfolio Administration and Reporting Service, for $10.5 million
- Hub24 will become a 40 per cent shareholder of an accounting and financial service provider, Easton Investments (EAS), as it agrees to give Easton ownership of its Paragem business
- The combined trio of deals will cost Hub24 around $93 million
- To help pay for some of this, the company is aiming to raise $60 million through a placement and share purchase plan (SPP)
- Hub24 shares will remain in a trading halt until the placement is complete or by Friday (October 30)
- Company shares last traded for $20.97 each
Hub24 (HUB) has announced three strategic transactions with plans to raise $60 million.
The company will be purchasing Xplore Wealth (XPL) and Ord Minnett’s Portfolio Administration and Reporting Service (PARS). The business also plans to sell its Paragem business to Easton Investments (EAS).
Xplore Wealth
Xplore is one of Australia’s largest serving independent specialist platform providers and investment administrators.
Hub24 has entered into an agreement to buy Xplore 100 per cent of its equity for 20 per share, valuing Xplore at $60 million.
Under the agreement, Xplore shareholders will receive a total value of 20 cents per share which includes 50 per cent cash and 50 per cent of Hub24 shares. However, there is flexibility with this and shareholders can elect to have all cash or all shares.
The Board of Xplore has unanimously recommended shareholders to vote in favour of the deal and says each director will be voting yes.
“The offer from Hub24 is highly compelling for Xplore shareholders. The
Australian investment platform market is undergoing significant consolidation driven by rapid change in the advice and wealth management sectors,” Xplore Chairman Alex Hutchison said.
“For Xplore staff, the Hub24 transaction underlines a critical point: a growing business sees strong value in our highly experienced people. The Xplore business has been built from the ground up on the shoulders of a highly qualified and skilled team,” he added.
Ord Minnett’s Portfolio
Ord Minnett is a leading private wealth management company and its PARS is a non-custody portfolio service, that includes tax reporting and corporate action management.
The purchase of PARS is for an upfront cash payment of $10.5 million and is expected to place Hub24 as one of the leading non-custody platform service providers in Australia.
“Ord Minnett is already a significant user of the Hub24 platform and the combination of these offers is expected to deliver clients and advisers a significant improvement in functionality and service,” the company told the market.
The Easton Investment
Hub24 has agreed to purchase new shares in accountant and financial service provider Easton Investments. Additionally, the company has agreed to divest and merge its subsidiary Paragrem and will give the ownership to Easton.
This agreement will see Hub24 becoming a 40 per cent shareholder in Easton. The combined company will be ” one of Australia’s leading providers of services to accountants and financial advisers”.
“Paragem is an important acquisition for Easton having regard to both the capability and know-how of its staff and the high quality of its professional network of advisers,” Easton’s Chairman Kevin White said.
Capital raising
The combined trio of deals will cost Hub24 around $93 million. To help pay for some of this, the company is aiming to raise $60 million through a placement and share purchase plan (SPP).
Under the placement, the company will issue 2.5 million shares to sophisticated and institutional investors for $20 per share. Hub24 aims to raise $50 million in the placement.
A further $10 million is aiming to be raised in a SPP. Under the SPP, eligible shareholders will be able to purchase up to $30,000 worth of new shares.
In addition to the equity raise, ANZ will provide Hub24 with a three year $12.5 million debt facility.
“We look forward to the successful completion of these transactions. We expect to complete the acquisition of Ord MInnett’s PARS this calendar year and look forward to welcoming the PARS team to Hub24,” Hub24 CEO Andrew Alcock said.
On the market, company shares will remain in a halt until Friday (October 30) or when Hub24 completes the placement. Hub24 last traded at $20.97 per share.
