HUB24 Enters Trading Halt as Buying Spree Continues

When we last visited what portfolio manager HUB24 Ltd [ASX:HUB] was up to back in October, it had launched a barrage of bids on three acquisition targets.

To give you a refresher, those targets are:

  • Xplore Wealth Ltd [ASX:XPL]
  • Ord Minnett’s portfolio administration and reporting service division
  • A 40% stake in Easton Investments Ltd [ASX:EAS]

With two of those three acquisitions now complete, HUB has entered a trading halt in relation to the proposed acquisition of XPL.hub24 share price

Source: Trading View

At time of writing the HUB share price is $26.51 and has returned 143% over the past 12 months.

Strengthening strategy almost complete

Back in October, HUB announced they would go after these three targets as part of their strategy to strengthen their position as the leading provider of integrated platforms for financial advisers and brokers.

Once finished, HUB24 will spend roughly $93 million to secure these three targets.

With the lion’s share ($60 million) to be spent on the potential XPL acquisition.

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And that is what the trading halt relates to today.

XPL shareholders and option holders will today vote on the proposed acquisition, a scheme which the XPL board is in favour of.

HUB has offered 20 cents per XPL share, a premium of 203% to the closing price of Xplore shares on 27 October 2020.

In return, HUB is getting a rapidly growing investment administration service which now boasts $16.57 billion in funds under administration (FUA).

In the December quarter, XPL’s FUA grew by a $1 billion, representing 6.7% quarter-on-quarter growth.

HUB could now inherit a profitable XPL, with the investment administrator turning a profit of $387,000 for 1H2021.

A stark improvement from 1H2020’s $12 million loss.

What’s next for HUB24?

Should XPL shareholders vote in favour of the proposed acquisition, HUB could become a significantly larger firm.

FUA across the newly combined group is expected to total $42 billion ($28 billion in custody, and $14 billion in non-custody).

It will also consolidate HUB’s position as a leading specialist platform provider and technology services business.

And given the Big Four banks’ sell-off of their wealth management arms and traditional wealth managers like AMP Ltd [ASX:AMP] struggling, HUB’s new approach could help cement the firm as an industry leader.

But HUB24 isn’t the only company in the financial space making headway lately. The bustling fintech sector is surging once more, especially in small-caps. That’s why we’ve put together a report on three of our favourites. Check it out, for free, right here.

Regards,

 Lachlann Tierney,
For Money Morning


Lachlann Tierney is an Analyst for Money Morning and has been investing for nearly a decade. With a Masters of Science from the London School of Economics, he brings a sound understanding of global markets to his writing. Lachlann is interested in emerging technologies, energy solutions and helping people invest their money wisely. Recently he has been working with Ryan Dinse. Lachlann is involved in two publications:


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