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]
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.
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For Money Morning