Clime Investment Management has entered into negotiations about a strategic business alliance with listed investment house Teaminvest Private Group (TIP) in a move to return the firm to profitability.
This is proposed to include the acquisition of Adelaide-based wealth advisory business Enva Group from TIP, the joint establishment of an equity research offering as a new revenue stream and access to TIP’s managed wholesale and private equity investments for investors.
Regarding the Madison Financial Group, the deal would provide corporate advisory support and bring it into a structure with greater adviser equity participation and profit upside.
Clime will place 4.5 million shares to TIP to raise $1.35 million to be completed on 10 January 2024.
A statement on the ASX on 29 December said: “TIP is a listed investment house with direct investments in private equity, funds management and corporate advice. Like Clime, TIP has a long heritage focused on education and value investing.
“Both Clime and TIP utilise proprietary fundamental analysis to identify attractive investments across multiple asset classes and together cover the full spectrum of traditional investments.
“The directors believe the two companies are culturally aligned, both with a heritage of self-directed investors.”
Upon successful completion, TIP chief executive, Andrew Coleman, will join the board of Clime.
The two firms have already worked together – in August, the two companies partnered to establish online financial education program My Financial Fitness which is due to be released in the first quarter of 2024.
Clime is hopeful the deal will boost its profitability as the firm’s FY23 results reported a full-year statutory loss of $2.3 million compared to a profit of $0.2 million in the previous year.
Chairman John Abernathy attributed this to factors including a greater reset of the business than had been envisaged, greater than expected business costs and a challenging advisory landscape.
“Our industry has a high and growing fixed cost element that requires providers to constantly reset their operational focus or achieve scale and profitability,” he said in August.
“Our drive for product excellence and scale is weighed against the increasing complexities of running multiple businesses and a tough competitive landscape. The ‘road to scale’ requires many adjustments to business strategy, often weighing between organic and inorganic sources of growth.”
Shares have also fallen 32 per cent since the start of 2023, making Clime one of the worst-performing fund managers this year.
