Sequoia confirms $3.1m initial payments from Morrison Securities deal
In selling 80% of its equities clearing business, Morrison Securities, to New Quantum, Sequoia’s cash at bank on settlement was expected to exceed $45 million this year.
It confirmed receival of cleared funds of $1.65 million on 20 March, following an initial deposit of $1.5 million on 9 March when the deal was formally signed.
Sequoia had acquired Morrison Securities in September 2017, offering third-party stockbroking execution solutions to AFSL holders such as financial planners, financial advisers, banks, building societies and trading educators.
However, it announced a deal earlier this month to divest 80% to digital wealth management platform New Quantum.
By 31 May, it was expected to receive $15 million, at which time it would transfer 50.1% of the shares of Morrison to New Quantum.
“On successful completion of this transaction, Sequoia will hold 20% of the shares on issue in Morrison, which will have an independent balance sheet with $105 million of cash at the date of the transfer of shares,” Sequoia stated in a statement to the ASX.
“Post this 80% divestment in the clearing business, Morrison financial results will not form a part reportable consolidated revenue and earnings.
“FY24 forecast for Sequoia consolidated revenue will reduce by approximately $30 million per annum attributable to Morrison to $100 million per annum without taking into account any additional acquisitions or divestments made prior to end of that financial year.”
However, if the purchase price balance of $15 million was not received by the end of August, Sequoia would have received $25 million in deposits and stage 1 completion payments, and would hold a call option to buy back the shares in Morrison for an exercise price of $17.85 million.
Further announcements were expected before 30 June 2023.
In its results announcement to the ASX for the six months to 31 December 2022, Sequoia reported a 22.7% decline in total revenue to $61.1 million.
Normalised EBITDA, or operating profit, had been down 42.5% to $3.2 million while the firm’s statutory net profit after tax dropped by 75.9% to $630,510.
It had been termed a “disappointing result” compared to 1HFY22, when total revenue had been $79 million and normalised EBITDA was $5.5 million.
AUTHOR
Rhea Nath
Recommended for you
Financial advice platform Otivo has made an experienced appointment from the US as its head of product strategy.
Apostle Funds Management has appointed the newly created position of director, head of wholesale as the firm expands its Australian footprint in the wholesale sector.
Recruitment manager Robert Half has shared the most in-demand roles in financial services that firms are finding difficult to fill, driven by ASIC’s growing focus on risk and compliance.
ASIC chief executive, Warren Day, is among senior executives to depart the corporate regulator amid changes to its leadership team.
Add new comment