AFH Financial Group has continued its acquisition spree with the purchase of financial services business CTL Three, together with its five subsidiaries, for £10m ($12.7m, €11.3m).
This is the firm’s largest-ever acquisition and takes its funds under management (FUM) to more than £5bn.
AFH’s spending spree started around 18 months ago, and a spokesperson for the firm told International Adviser that there is money in the bank and the acquisitions are not being funded by debt.
Over the last year, it launched two share issues which raised around £32.5m for the company.
It is believed that there should be around £10-15m left for acquisitions to continue its UK expansion. The full balance will be announced by the firm in January.
In addition CTL Three, which is based in Hull in north-east England, the deal also brings its five subsidiaries under the AFH umbrella.
They are The Insurance Partnership Financial Services; PCWM; IFA Professional Planning; Private Client Wealth Management (Yorkshire); and Kirk Ella Investments.
AFH chief executive Alan Hudson said: “This is a historic deal for AFH. With £5bn now under management, we have met one of our group three-to-five-year objectives – after just two years.
“At the start of the 2017 financial year, the board set itself three medium-term financial aspirations: FUM of greater than £5bn, revenues of £75m per annum and underlying Ebitda margin of 20% on revenue.
“We are now established as one of the largest financial advisers in Yorkshire and the north-east.”
CTL Three’s managing director, Paul Hodgson, will become AFH’s regional director for the north of the country.
Details of the deal
As a result of the transaction, Hodgson, Paul Newman, Shane Beardsley and Victoria Hicks, together with 22 advisers and their support staff, will join AFH bringing over £530m of FUM.
Under the terms of the acquisition, the maximum purchase price is £10m dependent upon performance criteria of the business acquired.
The initial consideration for the acquisition will be a cash payment of £4.2m, funded from the company’s existing cash resources, and the issue of 26,178 ordinary shares of 10 pence each in the company to Hodgson at 382p, prior to completion.
Further deferred consideration will be payable in cash over the next 26 months, subject to enhanced performance criteria of the business being achieved.
This latest deal comes weeks after International Adviser reported that AFH had acquired Premier Wealth Management Harrogate for £4.5m.