Financial services group continues acquisitive streak

AFH chief executive Alan Hudson

Bromsgrove financial services group AFH is pushing ahead with its acquisition drive with the purchase of two firms in deals worth more than £7m, raising its total funds under management to more than £5.6bn.

The wealth management firm’s acquisition of Mulberry Independent Financial Advisers based in Twickenham will see four advisers, including the founders and current directors, join AFH together with their support staff bringing their clients and £170m of funds under management.

The maximum purchase price is £5.3m, dependent on the performance of Mulberry during the earn out period. The initial consideration for the acquisition of £2.3m was paid from existing cash reserves with the balance payable in cash over a 26-month period.

AFH has also completed the acquisition of AE Garment Independent Financial Services based in Hemel Hempstead, bringing in an additional £45m of funds under management.

The maximum purchase price is £1.9m of which an initial consideration of £1m was paid in cash on completion. Further deferred consideration will be payable in cash over the next 26 months, subject to agreed performance criteria of the business being achieved. Following the acquisition, Tony Garment retired from the business with his clients allocated to existing AFH advisers.

The two deals will bring a combined £215m of funds under management.

AFH saw revenues rise 61% in the first half of 2019 as it reaps the rewards of its aggressive acquisition strategy, making four acquisitions in the period, and spending £16m acquiring 16 businesses in 2018.

For the six months to the end of April, revenues rose to £36.6m from £22.7m in the prior year period, while underlying EBITDA up 74% to £7.7m.

Profit after tax was up 80% to £4.5m as the company saw funds under management rise 68% to £5.4bn.

Alan Hudson, chief executive of AFH, said: “The announcement of these latest acquisitions follows our recently completed £15m placing in July 2019. Notably, the acquisitions have been completed on attractive, value-enhancing multiples, in line with our business model and those negotiated in previous transactions. We continue to undertake due diligence on the pipeline of acquisition opportunities that were referenced in the placing announcement and look forward to updating the market in due course.

“The company continues to enjoy strong organic inflows of funds from existing and new clients with low redemptions. During the current year double digit gross inflows continue to be achieved whilst outflows, including pension drawdowns, remain below 2%.

“As we continue to build AFH into the leading financial planning led wealth management firm in the UK, we are primarily focused on driving the organic growth of our business by providing professional and cost-effective services to our clients and, in-turn, enhancing profitability. Following the placing the company retains significant levels of cash and remains well placed in this period of economic and political uncertainty to continue its record of delivering profitable growth and enhanced shareholder value.”

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