Selfwealth acquirer bets on mass affluent market
Selfwealth’s acquirer, Syfe Group, has said the firm is hopeful of opportunities from the mass affluent population as it believes a gap exists between DIY brokerage and financial advisers.
Selfwealth announced earlier this year that it plans to be acquired by Svava (owned by Syfe) by way of scheme of arrangement for $0.28 per share, having rejected a previous bid from Bell Financial Group (BFG) for $0.25 per share.
The move was a surprise as it had previously entered into a scheme of arrangement with BFG, but Svava increased its offer and BFG declined to make a counterproposal.
Selfwealth, which was launched in 2013, offers online equity trading and a financial adviser platform to help advisers manage client portfolios and self-managed superannuation fund (SMSF) investing.
At a scheme meeting on 22 April, some 88 per cent of shareholders approved the deal.
Selfwealth had stated during the meeting that it may be unable to increase its scale on its own if the deal was rejected by shareholders.
“Scale is increasingly important in the online equity trading market for a range of reasons. Selfwealth is relatively small in both capital base and customer footprint, and there is no certainty that Selfwealth will be able to increase its scale as an independent company or maintain profitability.
“If the scheme does not proceed, Selfwealth shareholders will continue to be subject to the risks associated with Selfwealth’s business including a market that is highly competitive, cyber risk, the increasing costs of regulatory compliance and the risks of Selfwealth’s current transformation program.”
Commenting on the opportunities presented by the new deal, Syfe founder and chief executive, Dhruv Arora, said Syfe is hopeful of growing its presence and investor base in Australia, especially with mass affluent investors. There are around 12 million Australians who have investable wealth of US$100,000, he said.
The firm currently operates in Singapore, Hong Kong and Australia.
He said: “We believe now is the time to strengthen our presence in Australia. Despite the largest intergenerational wealth transfer in history presently underway, a large proportion of Australians are still keeping their wealth in savings accounts, foregoing significant market returns.
“For many, the missing link is objective, transparent advice and access to the right investment solutions. Syfe is well placed to tap into this opportunity through advice and education, as well as a low-cost, innovative offering that doesn’t compromise on quality.
“Despite unprecedented growth, there remains a gap in the digital investment and advice space, with a lack of options between traditional pure DIY brokerages and expensive private banking or independent adviser services.”
A second court hearing to approve the scheme will be held on 28 April with an implementation date scheduled to be on 7 May. Selfwealth will become delisted from the ASX and turn into a wholly owned subsidiary of Syfe Group, operating as Selfwealth by Syfe.
AUTHOR
Laura Dew
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