Funds management sits high on Prime Financial’s M&A radar
Prime Financial chief executive and managing director Simon Madder speaks with Money Management on how it hopes to complete more acquisitions in the funds management space.
Last week, Prime Financial announced its half-yearly results for the 2024 financial year. The firm reported a 38 per cent revenue growth in its wealth management division for 1H24 and an overall revenue increase of 14 per cent to $18.2 million from $16 million in the previous period.
The firm is currently targeting the highest growth in its 25-year history as it seeks to double revenue from $26 million in FY22 to $50 million in FY25, and eventually hit $100 million by FY30.
Speaking with Money Management, Madder shared further details on the company’s growth strategy which is equally weighted between organic growth initiatives and external acquisitions.
“We’re looking at not just organic growth, but also inorganic growth through acquisitions. You’ll see us doing more around business services and accounting services. There is also an appeal to that funds management space, like what we just did with Altor Capital which made a lot of sense for us,” he remarked.
The company announced earlier this month that it has acquired fund management platform Altor Capital as it seeks to build out a diversified alternative asset management business.
In the past 16 months Prime completed two acquisitions, but the firm had not done any in the five years before that.
The CEO continued: “I think you can expect more acquisitions and more growth [from Prime]. Growth is the theme of the day in terms of where we’re heading, and we’re so lucky to play in this industry.
“There’s so much opportunity for growth. There’s lots of people that operate in this space who are doing interesting and exciting things, but I don't think anyone’s really grabbed ahold of it.”
Moreover, Madder cautioned other firms to not acquire just for the sake of acquiring without having a detailed long-term plan for expansion.
“Acquisition for acquisition’s sake and not having a very clear methodology is dangerous. If you think you’re just buying to get more revenue and get more clients without a clear pathway to how you’re going to grow that even more organically, that is very risky,” he explained.
M&A opportunities in financial advice
Looking beyond funds management, Madder recognised the “tough period” that financial planning has undergone since the Hayne royal commission, including regulatory hurdles and changes to education requirements.
As a result, he recognised: “There’s some businesses that have probably said ‘enough is enough’ and maybe it’s just easier to sell my business or merge with someone else because maybe I’m better to just deal with clients rather than trying to run the business.”
Paul Barrett of AZ NGA is another chief executive who has recognised the “unprecedented” M&A opportunities in the advice market.
“I think people are now viewing advice margins as the real deal, whereas when we started nearly nine years ago, that wasn’t the case. There’s no doubt that financial advice is now in and of itself a valuable product, and that’s why capital has appeared to come in and buy it,” he previously told Money Management.
“I’ve never seen the advice market more buoyant and confident about [M&A]. There’s so much going on.”
AUTHOR
Jasmine Siljic
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