Platform provider HUB24 has moved to acquire Xplore Wealth and sell Paragem.
The transaction substantially expands HUB24’s presence in the platform sector with HUB24 entering into a scheme of arrangement with Xplore Wealth.
Both HUB24 and Xplore Wealth entered into trading halts on the Australian Securities Exchange (ASX) shortly before the transaction was announced, with HUB24 announcing that it was also proposing an equity raising by way of an institutional placement and share purchase plan.
At the same time Easton Investment Limited announced that it had entered into a binding heads of agreement with HUB24 entailing a strategic investment and technology partnership and the acquisition of Paragem from HUB24.
Announcing the move, HUB24 said it entailed three strategic transaction which would together strengthen its position as the leading provider of integrated platforms, data and technology services for financial advisers, stockbrokers and private banks.
Announcing the transaction, Xplore chair, Alex Hutchison said the offer from HUB24 was 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,” he said. “Contribution factors include the benefits of economies of scale, heightened regulation and a sharp focus on the best interest of consumers served by advisers and best-of-breed administration tools and technology.
“The HUB24 transaction is an opportunity for Xplore shareholders to receive a highly attractive takeover premium and to retain an exposure to the investment platform industry via receive HUB24 shares,” he said. For Xplore staff, the transaction underlines a critical point – a growing business sees strong value in our highly experienced staff.”
HUB24’s formal announcement described the three transactions as being:
- the proposed acquisition of investment platform provider Xplore Wealth Limited (ASX:XPL) (‘Xplore’) by way of a scheme of arrangement for $60 million via a combination of cash and HUB24 scrip consideration at an effective Xplore share price of $0.20, which represents a premium of 203% to the closing price of Xplore shares on 27 October 2020
- the acquisition of Ord Minnett’s non-custody Portfolio Administration and Reporting Service (‘PARS’) for $10.5 million upfront cash consideration
- the proposed subscription for new shares in Easton Investment Limited (ASX:EAS) (‘Easton’) for cash consideration of $14 million and divestment of HUB24 subsidiary Paragem Pty Limited (‘Paragem’) to Easton for $4 million of new Easton shares which, following a share buyback, will result in HUB24 having a shareholding of up to 40% of Easton1.The Easton shares will be issued at a share price of $1.20, which represents a 38% premium to the closing price of Easton shares on 27 October 2020.
