IWL buys Rivkin broking business
By Craig Phillips
IWL is set to acquire the underlying broking assets of Rivkin Financial Services-owned Avcol Stockbroking in a deal worth $10.2 million.
The move was first hinted at last November when IWL subsidiary Pinnacle Asset Management bought 10.14 per cent of RFS’ issued capital.
The purchase of the non-advice online broking business, which requires RFS shareholder approval, will allow IWL to increase its presence across the eastern states, according to IWL chief executive Otto Buttula.
The deal will also allow IWL to divest its holding in RFS, the group founded by disgraced stockbroker Rene Rivkin, which in turn is seeking to buy back and cancel a number of holdings by non-aligned RFS stakeholders.
The deal, which includes a cash payment of $5.2 million, will see Pinnacle cancel more than 12.5 million shares in RFS, with RFS also being issued with IWL shares or a combination of shares and an additional cash payment of $2.2 million.
“The main outcome from this is that each group’s shareholders are better off. We acquire a stock broking company while RFS shareholders will see an increase in net tangible assets and gets rid of its non-core stakeholders to allow it to become a pure investment company,” Buttula said.
According to Buttula, IWL’s interest in RFS was only ever intended to aid its increased exposure to the non-advice and broking markets. He said the purchase of Avcol, which generated $7 million in revenue last year and made $1.5 million in after tax profit, will now assist in achieving this aim.
Meanwhile, RFS is repositioning itself as a pure investment company with plans to dispose of its shareholding in the Network company — a firm primarily owned by RFS chairman Farooq Khan.
Network and Cole Kablow Superannuation — a fund linked to Khan — also own a significant chunk of RFS and will now dispose of their respective shareholdings.
In addition, RFS has also confirmed it is finalising an agreement with Alan Davis Group (ADG) to enable its shareholding in RFS of 7,305,784 shares to be bought back and cancelled for $1,607,272.
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