Wholesale investment management platform Powerwrap has agreed to be acquired by rival Praemium for $55.6 million in cash and scrip in a deal that would strengthen its position as Australia’s second-biggest independent investment platform.
Powerwrap shareholders would receive 7.5 cents per share and one Praemium share for every two Powerwrap shares – the equivalent of 26.44 cents per share at Wednesday’s closing prices, a 51.1 per cent premium.
Praemium already owns 14.7 per cent of Powerwrap and the off-market takeover offer is conditional on 90 per cent of Powerwrap’s shareholders accepting it by August 31.
“Powerwrap’s board believes the offer presents an excellent opportunity for Powerwrap shareholders to participate in the upside of a merged group that stands to benefit from significant potential synergies,” said Powerwrap chairman Anthony Wamsteker.
At 1250 AEST, Powerwrap shares had soared 48.6 per cent to 26 cents, while Praemium shares were up 23.0 per cent to 45.5 cents.
Melbourne-based Powerwrap listed on the ASX in May 2019 following a $17.4 million initial public offering at 35 cents per share, but its shares have never approached that price.
The platform is aimed at independent financial advisors servicing high net worth individuals, with an average account size of $1.9 million.
Powerwrap also offers financial advisors trading, licensing, compliance and back support as well as office space at its Collins Street premises.
Powerwrap has $7.9 billion in client accounts, and the combined group would have over $27 billion in funds under administration in Australia, the UK and other offshore markets.
That would put it just behind Netwealth with $27.9 billion funds under management as of March 31, and well ahead of Hub24 with $15.1 billion.
Powerwrap licences Praemium technology and Praemium said the combined group could realise an estimated $6 million in synergies by fiscal 2022.
“We believe the merged company would be a formidable force in the Australian platform industry,” Praemium chief executive Michael Ohanessian said.