Hub24 Limited · ASX:HUB
Hub24 — Merger or Acquisition (October 2020)
32 slides from Hub24's merger presentation, Oct 28, 2020
Slide 1: Strategic Acquisitions & Equity Raising
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES 28 OCT 2020 STRATEGIC ACQUISITIONS & EQUITY RAISING Positioning HUB24 Group as the leading provider of integrated platform, data and technology services to Australian wealth advisory businesses INVESTOR PRESENTATION
Slide 2: Contents
Details of the transactions Equity raising Summary CONTENTS Appendices 2 2
Slide 3: Executive Summary
EXECUTIVE SUMMARY Executing on our strategy with three acquisitions to build foundations for the future by: Taking a leadership position in the provision Extending our market leadership of non-custodial administration services Creating additional revenue leveraging our Broadening our product offer a
Slide 4: At a Glance: Position HUB24 for Ongoing Success
AT A GLANCE POSITION HUB24 FOR ONGOING SUCCESS Strengthening position as leading Specialist Platform Provider Market leader in non-custody, direct HIN solutions Enhanced capabilities including bonds and international Proposed domiciled managed funds XPL Acquisition of Strategic partnership with a le
Slide 5: A Series of Compelling, Strategic & Accretive Acquisitions
A SERIES OF COMPELLING, STRATEGIC & ACCRETIVE ACQUISITIONS STRENGTHENING POSITION AS LEADING SUPPORTING THE BUILDING FOUNDATIONS FOR SPECIALIST PLATFORM PROVIDER TRANSFORMATION OF ADVICE FUTURE GROWTH Acquisition of Ord Minnett’s Portfolio Proposed investment in Easton Investments Broadens HNW clien
Slide 6: Transactions Add Material Scale to HUB24
TRANSACTIONS ADD CONSOLIDATING HUB24’S LEADERSHIP IN THE SPECIALIST MATERIAL SCALE TO HUB24 PLATFORM SECTOR Funds Under Administration $28bn Custody $14bn Non-custody 1 HUB24 pro forma $19bn $15bn $8bn 1 1 A significant increase in FUA to $42bn comprising $28bn in custody Netwealth $34bn Insert and
Slide 7: Funding & Consideration
FUNDING & CONSIDERATION EQUITY RAISING DEBT FACILITY CONSIDERATION $50m fully underwritten Placement ANZ have committed to providing Proposed $60m cash and scrip to sophisticated and institutional a $12.5m 3-year ANZ Debt Facility acquisition of Xplore Wealth investors Credit approved subject to lon
Slide 8: Details of the Transactions
DETAILS OF THE TRANSACTIONS 8
Slide 9: Overview of Xplore Wealth Ltd
Revenue – $22.98m (as at 30 June 2020) OVERVIEW OF XPLORE WEALTH LTD Superannuation (ASX: XPL) 9% Non-Custody Xplore Wealth is a specialist investment platform & superannuation services 6% provider delivering; Custody Platform solutions to clients serviced by institutional (High Net Worth/Private 85
Slide 10: Proposed Acquisition of Xplore Wealth
PROPOSED ACQUISITION OF XPLORE WEALTH HUB24 to acquire 100% of the outstanding shares of XPL via Scheme of Arrangement STRUCTURE XPL shareholders pro forma ownership of approximately 2% of the merged group (following completion of the Placement) Cash consideration of $30m and scrip consideration of
Slide 11: Acquisition of Ord Minnett's PARS
ACQUISITION OF ORD MINNETT’S PARS Acquisition of Ord Minnett’s Portfolio Administration & Reporting Service business ▪ One of the largest providers in the market ▪ Includes team of 11 FTE, related software and intellectual property STRUCTURE ▪ 15 years of non-custody administration experience HUB24
Slide 12: Strategic Rationale – Xplore Wealth and PARS
STRATEGIC RATIONALE – XPLORE WEALTH AND PARS INCREASED SCALE BROADEN CAPABILITIES EXTEND REACH EXTRACT SYNERGIES Transaction adds material scale to Delivers access to new capabilities & Approximately 400 new active adviser Reduction of corporate overheads HUB24 platform, with additional FUA products
Slide 13: Proposed Investment in Easton Investments Ltd
PROPOSED INVESTMENT IN EASTON INVESTMENTS LTD (ASX: EAS) Binding Heads of Agreement to subscribe for new shares in EAS and divestment of Paragem for EAS shares ▪ ASX-listed EAS focuses solely on providing integrated accounting and wealth management services to the Australian market HUB24 to hold up
Slide 14: Strategic Rationale – Easton Investments
STRATEGIC RATIONALE – EASTON INVESTMENTS LEVERAGE OPPORTUNITY FROM LEADERSHIP POSITION BENEFITS TO PARAGEM CURRENT GAP IN THE MARKET Consolidate HUB24’s position as strategic Advisers transitioning out of institutions to self- Paragem joins a business focused on an technology provider for financial
Slide 15: Equity Raising
EQUITY RAISING 15
Slide 16: Equity Raising & Balance Sheet
EQUITY RAISING & BALANCE SHEET Strength provides opportunity to execute strategic Pro-forma cash position (as at 30 June 2020) step change ADDITIONAL LIQUIDITY 13 (30) Placement $50.0m 60 SPP1 $10.0m (11) Total cash from equity raise $60.0m Insert (14) ANZ debt facility2 $12.5m (13) Total additional
Slide 17: Targeting $60M Raising via Institutional Placement and SPP
TARGETING $60M RAISING VIA INSTITUTIONAL PLACEMENT AND SPP Offer size ▪ Fully underwritten institutional Placement to raise $50m (the “Placement”) ▪ Issue 2.5m new fully paid ordinary shares to sophisticated and institutional investors under the Placement (the “Placement Shares”) representing 4.0% o
Slide 18: Equity Raising Timetable
EQUITY RAISING TIMETABLE EVENT DATE Record date for SPP 7.00pm (Sydney time), Tuesday, 27 October HUB24 enters trading halt, Placement and the SPP announced Wednesday, 28 October Placement bookbuild Wednesday, 28 October Announcement of the outcome of Placement Thursday, 29 October Trading halt lift
Slide 19: Appendices
APPENDICES 19
Slide 20: Share Subscription Agreement and Technology Partnership Agreement with Easton
SHARE SUBSCRIPTION AGREEMENT AND TECHNOLOGY PARTNERSHIP AGREEMENT WITH EASTON Share Subscription Agreement Under this agreement Easton agrees to issue approximately 11.7m Shares at $1.20 per Share to HUB24 resulting in an ownership of approximately 30.5% of Easton fully diluted share capital. Easton
Slide 21: Outline of Transaction Considerations & Costs
OUTLINE OF TRANSACTION CONSIDERATIONS & COSTS Cash Share consideration Share consideration for Integration and $m consideration (HUB shares) Paragem (EAS shares) transaction costs Total Xplore 30.2 29.8 60.0 PARS 10.5 10.5 EAS 14.0 14.0 (4.0) Paragem (4.0) Implementation costs 10.3 10.3 Transaction
Slide 22: Summary of Xplore Wealth SIA Terms
SUMMARY OF XPLORE WEALTH SIA TERMS Overview On 28 October 2020 HUB and XPL entered into a scheme implementation agreement that governs the terms upon which the parties propose that XPL propose and implement a Scheme of Arrangement (“Scheme”) between XPL and its shareholders (the “SIA”). The SIA also
Slide 23: Key Risks
KEY RISKS Introduction ▪ Investors should be aware that there are risks associated with an investment in HUB24. Some of the principal factors that may, either individually or in combination, affect the future operating and financial performance of HUB24 and the value of HUB24 shares (before and afte
Slide 24: Key Risks
KEY RISKS Change of control ▪ The acquisition of Xplore Wealth and the investment in Easton Investments will result in a change of control of Xplore W ealthand Easton Investments. There are a number of contractual arrangements with counterparties which are the subject to review, consent or terminati
Slide 25: Key Risks (cont'd)
KEY RISKS (cont’d) Historical liabilities ▪ In making the proposed acquisitions of Xplore W ealth HUB24 will be liable for historical liabilities of these businesses which may affect future profitability and reputation. ▪ In making the proposed investment of 40% of Easton Investments, historical (kn
Slide 26: Key Risks (cont'd)
KEY RISKS (cont’d) Key Personnel ▪ HUB24 is heavily reliant on the skills and services offered by its personnel. An ongoing and continuous risk of the industry that HUB24 operates within is key employees leaving the business to join competitors or to exit the industry entirely. ▪ The relationship be
Slide 27: Key Risks (cont'd)
KEY RISKS (cont’d) Dividends ▪ Any decisions regarding the payment of dividends in respect of HUB24’s shares is determined at the discretion of HUB24’s board of directors. ▪ Due regard is given to relevant factors, which include available profits, cashflow, financial condition, operating results, fu
Slide 28: International Offer Restrictions
INTERNATIONAL OFFER RESTRICTIONS This document does not constitute an offer of new ordinary shares ("New Shares") of the Company in any jurisdiction in which it would be unlawful. In particular, this document may not be distributed to any person, and the New Shares may not be offered or sold in the
Slide 29: Important Notices and Disclaimer
IMPORTANT NOTICES AND DISCLAIMER The following notice and disclaimer applies to this investor presentation (Presentation or document) and you are therefore advised to read this carefully before reading or making any other use of this Presentation or any information contained in this Presentation. By
Slide 30: Important Notices and Disclaimer
IMPORTANT NOTICES AND DISCLAIMER Investment risk An investment in the New Shares is subject to investment and other known and unknown risks, some of which are beyond the control of HUB24 including loss of income and principal invested. The Company does not guarantee any particular rate of return or
Slide 31: Important Notices and Disclaimer
IMPORTANT NOTICES AND DISCLAIMER Disclaimer The information in this Presentation has been obtained from or based on sources believed by HUB24 to be reliable. E&P Corporate Advisory Pty Ltd and Ord Minnett Limited are acting as Joint Lead Managers and underwriters to the Placement (Underwriters). A s
Slide 32: This release is not financial product advice. Past performance is not indicative of future
This release is not financial product advice. Past performance is not indicative of future performance and any forward- looking statements in this release are not representations or guarantees as to future performance. This announcement was authorised for release to the market by the HUB24 Limited B