Nick Dignam from Fortitude Investment Partners shares insights with Lachlan Maddock from Fortitude Investment Partners on how a diversified portfolio in mid-market private equity is structured. The Inside Adviser
The world of alternative investments is at a crossroads. As markets defy expectations and liquidity concerns take centre stage, investors find themselves forced to rethink how they deploy capital in an increasingly complex environment.
HUB lobs a takeover bid for Class, boosting shares up almost 70 per cent
HUB24 (ASX:HUB) and Class (ASX:CL1) – Class shares are on the rise today, up 62.98 per cent, on the back of a takeover bid by platform giant HUB24. The binding Scheme Implementation Deed (SID) proposes that HUB24 will acquire 100% of the shares in Class by way of a scheme of arrangement
Scheme consideration for 100% of Class ordinary shares as follows:
- 1 HUB24 ordinary share for 11 Class ordinary shares
- $0.10 per Class ordinary share in cash
- The implied total consideration represents a 52.8% premium based on the 1-month VWAP for both companies up to 15th October 2021
- Using the closing price of HUB24 shares on 15 October, the consideration to be offered to Class shareholders implies a value for Class of $3.11 per share and a market capitalisation of $386 million. This represents an attractive premium for Class shareholders of 71.6 per cent premium to the last trading price of Class shares on 15 October 2021.
- Class will operate as a HUB24 business unit with its own leadership team under the Class brands
On the face of it, both businesses are highly complementary businesses with aligned culture & values. With both companies operating in the same industry but complementary services, opportunities for growth by delivering increased efficiency and product capability will now exist for existing and new customers.
And let’s not forget the premium, which is more than generous. Class is selling a 71.6 per cent premium to the last trading price to its shareholders while HUB is trying to convince its shareholders of a 52.8 per cent. A large premium to pay from the HUB shareholder perspective. But there are a few positives from the deal such as :
- It accelerating HUB24’s platform of the future strategy and delivering compelling shareholder value
- It is 8% EPS accretive in FY23 (excluding revenue synergies and one-off implementation costs) and diversifies revenue streams for both businesses
The combined business would be also expected to provide a compelling and unique competitive advantage and diversification revenue.
HUB24 managing director Andrew Alcock said, “We’re excited to be announcing the proposed acquisition of Class Limited with the full support of the boards of both companies. Class are market leaders in the establishment, management and administration of wealth and SMSF solutions. The completion of this transaction will combine two exceptionally talented teams with a common purpose to empower better financial futures for Australians and provide a unique range of products and services for financial professionals and their clients.”
