Wealth management firm AFH Financial Group has reported it will pause its acquisition activities for the time being.
The firm said it is committed to deals already underway but will then redirect its resources towards “organic growth”.
The UK-based wealth manager has already made four deals this year including, Broadleaf Financial Services, Mulberry Independent Financial Advisers and AE Garment in September 2019, and Hayburn Rock Group in January 2019.
Since being admitted to the AIM in 2014, the firm completed 50 acquisitions.
Shift in focus
Considering the “uncertain political and economic climate” in the UK at the moment, however, AFH decided to “de-risk its model through a period of consolidation”.
This is not the first time the firm has made this type of move, as it opted for a similar shift in 2016.
“The board considers that many of the economic and political factors that existed in 2016 are again present and will influence investor behaviour for the foreseeable future,” AFH said.
“Therefore, following completion of the remaining acquisition opportunities identified to the market at the time of the convertible loan stock placing in July 2019 and currently undergoing due diligence, the board intends to focus the company’s resources on organic revenue growth.”
When it did so three years ago, AFH’s funds under management grew by 11%.
Keep growing
“We seek to align our growth with operational efficiencies and during the current year the company has invested heavily in digital marketing and IT infrastructure, all of which has been expensed, whilst absorbing the cost of clients using our Pershing-enabled AFH Direct platform,” said Alan Hudson, AFH’s chief executive.
“We were pleased to report robust growth in H1 2019, in May 2019, confirming strong growth in excess of 50% at revenue, Ebitda and EPS levels and are pleased to confirm that during H2 the business has continued to perform well.”
Additionally, the wealth manager said it will not need any funding from the equity market as its growth plans are going to be funded from working capital.
