The UK appears to have become an appealing market to our American cousins, with a spate of recent announcement heralding their growing presence in the space.
The latest of which is a conditional agreement between AFH Group and Cortina Bidco, a newly incorporated company indirectly controlled by funds managed by Flexpoint Ford.
Flexpoint managing director Steven Begleiter said: “We believe that the UK wealth management market is currently undergoing an important transition, as regulatory and demographic trends are driving increasing demand for high-quality financial advice tht can be met by IFA firms with a long-term and client-centric view.
“In addition, the market is highly fragmented, which provides an opportunity to service customers better and create value through consolidation.”
Details of the deal
The acquisition offer sets the price per scheme share at 463 pence, which equates to a valuation of £224.5m ($307m, €252.2m).
AFH’s independent directors said they “remain confident” in the firm’s prospects, but believe that partnering with Flexpoint will “assure the successful delivery of the growth strategy and unlock the full potential of the group over the long term”.
They believe that the acquisition “is the most attractive route for AFH to regain its growth trajectory”.
As such, the independent directors intend to vote unanimously to recommend shareholders vote in favour of the move.
Backing from at least 75% of shareholders is needed for the motion to pass.
As reported by International Adviser on 18 January, AFH had been on an impressive run of acquisitions before deciding in June last year to pause its M&A activity.
Who is Flexpoint?
The parent group behind the acquiring company, Bidco, is a US-based investment firm which has raised over $4.3bn (£3.1bn, €3.5bn) in capital and made over 30 investments since 2005.
Flexpoint specialises in the financial services and healthcare sectors.
Bidco is incorporated in the Cayman Islands and was formed specifically to acquire AFH Group.
What does it mean for AFH?
Group chief executive Alan Hudson holds 9.9% of the company and stands to net north of £24m, of which roughly 30% (£8.77m) will be reinvested in Bidco.
The AFH executive directors will remain with the company in their current roles. They will similarly reinvest 30% of their gross proceeds into Bidco.
John Wheatley, chairman of AFH, commented: “Since its IPO in 2014, the AFH management team has been focused on delivering shareholder value through a focus on organic growth and value accretive acquisitions, completing over 50 acquisitions and growing to over £6bn of funds under management.
“The independent directors believe that the terms of the acquisition are compelling, acknowledge the quality and strong prospects of AFH’s business and eliver attractive value to AFH shareholders in cash, allowing them to crystallise the value of their holdings.”
Hudson added: “The executive directors and I have always sought to deliver on our strategy of organic and M&A-led growth but in recent years this has been curtailed by being an AIM-quoted company.
“We believe the offer reflects our strong track record of increasing shareholder value, Flexpoint’s endorsement of our strategy and confidence in the continued success of AFH, as well as further investment required in the business.”
