SimplyBiz swoops for fintech firm in £74m deal
SimplyBiz, the Huddersfield-based business support company, has conditionally agreed to acquire Regulus Topco, owner of financial services technology business Defaqto, for £74.3m.
The combination of SimpyBiz and Defaqto creates a single fintech and support services group, which SimplyBiz said will benefit from an increased number and range of distribution channels.
Listed SimplyBiz, which earlier this month published its first full-year financial results as a public company following its AIM flotation in April 2018, was set up by the chairman of the Huddersfield Giants Super League Club Ken Davy in 2002.
Defaqto is a leading financial services technology business operating a fintech platform for 8,500 advisers and providing independent ratings of 21,000 financial products and funds, licensed by 230 brands. On completion of the deal, Defaqto will have £3.4m in cash on its balance sheet. Defaqto reported revenues of £12.8m in 2018 and adjusted EBITDA of £5.3m.
The firm has developed a proprietary, scalable and flexible IT platform and infrastructure, supporting the largest database of financial products in Europe and providing unique information and insights to aid consumer and adviser purchase decisions.
Neil Stevens & Matt Timmins, Joint CEOs of The SimplyBiz Group, said: “We are delighted to announce the successful acquisition of Defaqto, which will play an important role in building on the Group’s strong momentum and enabling us to unlock a wide range of additional growth opportunities.
“The combination of the largest provider of outsourced regulatory and business support to the retail financial services market, with one of the leading providers of financial information and technology, will create a market leading platform across Retail Financial Services. Collectively the two businesses will work to enhance our proposition to the Banking and General Insurance sectors whilst continuing to invest in the leading fintech platform.
“Having long respected the Defaqto management team, we also recognise not just the strong strategic fit of the business, but also its cultural alignment. Defaqto is a business built upon industry leading talent and we look forward to working with our new colleagues as we continue to enhance services to financial intermediaries and product providers, and deliver value for shareholders.”
Zahid Bilgrami, CEO of Defaqto added: “We are absolutely delighted with SimplyBiz’s decision to acquire Defaqto. It opens an exciting new chapter in our development as a leading financial information business, and we look forward to the many opportunities that being part of a larger Group will present.
“While it will enable us to continue operating in an independent and autonomous manner, it will also carry many advantages of being a part of a listed entity. It will enable us to develop new technology faster, and thus continue to develop market-leading products for our clients at a time of vast technological change in the Financial Services sector.”
SimplyBiz added that Defaqto will help the Group to advance its services into the General Insurance and Banking markets as it looks to expand its offering. Similarly, that SimplyBiz will offer Defaqto access to its knowledge and experience of the advisory and asset management markets.
SimplyBiz intends to finance the acquisition and associated expenses of £2.9m through a conditional placing of new ordinary shares in the capital to raise £13.8m.
It will also issue of new ordinary Shares to the value of £15.3m to certain of the vendors which will then be conditionally placed with institutional and other investors.
SimplyBiz will also issue new Ordinary Shares to the value of £7.5m to certain of the Vendors and approximately £37.5m will be borrowed from new bank facilities.
A total of £3.1m will be paid from the company’s current cash resources.
Eversheds Sutherland lead on the deal. The conditional Institutional Placing was conducted jointly by Zeus Capital Limited and Peel Hunt LLP.
