Slide 1: Acquisition of Lonsec and Equity Raising
Generation Development Group | Acquisition of Lonsec and Equity Raising | 1 For personal use only Acquisition of Lonsec and Equity Raising 3 June 2024 Presenters: Grant Hackett OAM Terence Wong Chief Executive Officer and Managing Director Chief Financial Officer Generation Life Generation Developme
Slide 2: Disclaimer
Generation Development Group | Acquisition of Lonsec and Equity Raising | 2 Disclaimer IMPORTANT NOTICE AND DISCLAIMER The following notice and disclaimer applies to this investor presentation (Presentation or document) and you should read it carefully before reading or making any other use of this
Slide 3: Disclaimer (cont’d)
Generation Development Group | Acquisition of Lonsec and Equity Raising | 3 Disclaimer (cont’d) Financial data All dollar values are in Australian dollars (A$ or AUD) unless otherwise stated. Prospective investors should also be aware that the pro forma financial information included in this Present
Slide 4: Disclaimer (cont’d)
Generation Development Group | Acquisition of Lonsec and Equity Raising | 4 Disclaimer (cont’d) Disclaimer The information in this Presentation has been obtained from or based on sources believed by GDG to be reliable. To the maximum extent permitted by law, GDG and Jefferies (Australia) Pty Ltd ACN
Slide 5: Table of contents
Generation Development Group | Acquisition of Lonsec and Equity Raising | 5 Table of contents For personal use only 1. Executive summary 6 2. Overview of Generation Development Group 8 3. Acquisition of Lonsec 15 4. Equity Raising overview 28 5. Trading update and FY24 outlook 36 Appendices a. Risks
Slide 6: Executive summary
Generation Development Group | Acquisition of Lonsec and Equity Raising | 6 Executive summary ▪ Generation Development Group Limited (ASX:GDG) (‘GDG’) has entered into a binding agreement to acquire the remaining 61.9% of Lonsec Holdings Pty Ltd’s (‘Lonsec’) fully diluted share capital1 not already
Slide 7: Executive summary
Generation Development Group | Acquisition of Lonsec and Equity Raising | 7 Executive summary For personal use only Transaction ▪ GDG intends to raise approximately $155.4m through a fully underwritten Institutional Placement and Accelerated Non-Renounceable funding / equity Entitlement Offer raisin
Slide 8: Overview of Generation Development Group
Generation Development Group | Acquisition of Lonsec and Equity Raising | 8 For personal use only Overview of Generation Development Group
Slide 9: GDG is well-positioned for future growth post acquisition and consolidation of Lonsec
Generation Development Group | Acquisition of Lonsec and Equity Raising | 9 GDG is well-positioned for future growth post acquisition and consolidation of Lonsec For personal use only Historical strategic objectives Current strategic objectives Future strategic objectives Where GDG has been and what
Slide 10: Generation Development Group business overview
Generation Generation Development DevelopmentGroup Group | |Acquisition Acquisitionof ofLonsec Lonsecand andEquity Raising|| 10 EquityRaising For personal use only 100% 49%1 Investment Bonds Annuities One of Australia’s largest qualitative research firms • $3.2bn in FUM (26% 3-year • Investment Link
Slide 11: Why Generation Development Group?
Generation Development Group | Acquisition of Lonsec and Equity Raising | 11 Why Generation Development Group? For personal use only Number one in investment bond Strong and sustained Resilient business model with Track record of inflows for three years running NPAT growth ‘sticky FUM’ product innov
Slide 12: Management team with proven track record
Generation Development Group | Acquisition of Lonsec and Equity Raising | 12 Management team with proven track record For personal use only Revenue*, A$m NPAT**, A$m 27% CAGR 37% CAGR $40.2 $8.2 $35.3 $6.3 $26.0 $19.9 $4.1 Rob Coombe Grant Hackett OAM $15.3 $2.8 Non-Executive Chairman Chief Executiv
Slide 13: No. 1 in inflows
Generation Generation Development DevelopmentGroup Group | |Acquisition Acquisitionof ofLonsec Lonsec and and Equity Raising|| 13 EquityRaising No. 1 in inflows For personal use only 60% $ 3,500 m 50% $ 3,000 m MARKET SHARE – INFLOWS $ 2,500 m 40% $ 2,000 m TOTAL FUM 30% $ 1,500 m 20% $ 1,000 m 10%
Slide 14: Momentum into FY24
Generation Generation Development DevelopmentGroup Group | |Acquisition Acquisitionof ofLonsec Lonsec and and Equity Raising|| 14 EquityRaising Momentum into FY24 Generation Life March 2024 For personal use only Annual Sales & Net Inflows ($millions) Closing Funds Under Management in December ($mill
Slide 15: Acquisition of Lonsec
Generation Development Group | Acquisition of Lonsec and Equity Raising | 15 For personal use only Acquisition of Lonsec
Slide 16: Strategic rationale
Generation Development Group | Acquisition of Lonsec and Equity Raising | 16 Strategic rationale For personal use only Familiar, low risk acquisition Strong financial contributor Significant growth upside Broader shareholder benefits Lonsec has performed well Lonsec is well known to since the initia
Slide 17: Introduction to Lonsec
Generation Development Group | Acquisition of Lonsec and Equity Raising | 17 Introduction to Lonsec Lonsec is positioned at the nexus of Australia’s financial advice and investment industry, helping clients and investors make better investment decisions For personal use only Lonsec overview Lonsec s
Slide 18: Overview of Lonsec’s key market segments
Generation Development Group | Acquisition of Lonsec and Equity Raising | 18 Overview of Lonsec’s key market segments Lonsec operates in multiple large and fast growing market segments For personal use only 1 Investment Research 2 Super fund Research 3 Adviser Research 4 Managed Accounts Managed fun
Slide 19: Overview of Lonsec’s segments
Generation Development Group | Acquisition of Lonsec and Equity Raising | 19 Overview of Lonsec’s segments Founded in 1994, Lonsec has grown to become one of Australia's pre-eminent providers of investment research, product ratings and managed account solutions For personal use only 1 Research and R
Slide 20: Investment highlights
Generation Development Group | Acquisition of Lonsec and Equity Raising | 20 Investment highlights Lonsec is a compelling investment proposition For personal use only 1 Strong industry and regulatory tailwinds increasing reliance on independent specialists 2 Market leading research and ratings offer
Slide 21: Strong industry and regulatory tailwinds
Generation Development Group | Acquisition of Lonsec and Equity Raising | 21 1 Strong industry and regulatory tailwinds Strong growth in end-markets and significant pressure on the wealth management industry creates tailwinds for Lonsec For personal use only Large and fast-growing wealth market1 Fac
Slide 22: Market leading research and ratings offering with resilient revenue
Generation Development Group | Acquisition of Lonsec and Equity Raising | 22 2 Market leading research and ratings offering with resilient revenue Lonsec’s research and ratings business is the best in the market and has a highly resilient revenue model For personal use only Consistently rated #1 res
Slide 23: Exposure to high growth managed accounts market
Generation Development Group | Acquisition of Lonsec and Equity Raising | 23 3 Exposure to high growth managed accounts market Lonsec managed accounts is a high growth business and is outpacing the already high growth, attractive managed accounts market For personal use only Managed accounts industr
Slide 24: Attractive financial profile and proven track record of growth
Generation Development Group | Acquisition of Lonsec and Equity Raising | 24 4 Attractive financial profile and proven track record of growth Track record of growth underpinned by a robust organic strategy, accelerated by acquiring value-add businesses in high- growth segments For personal use only
Slide 25: Highly experienced management team with strong track record to support growth
Generation Development Group | Acquisition of Lonsec and Equity Raising | 25 5 Highly experienced management team with strong track record to support growth For personal use only Michael Wright Amanda Smerdon Bruce Hawkins Kevin Brennan Chief Executive Officer Chief Financial (People) Officer Chief
Slide 26: Acquisition overview
Generation Development Group | Acquisition of Lonsec and Equity Raising | 26 Acquisition overview For personal use only Transaction ▪ GDG acquiring 61.9% of Lonsec’s fully diluted share capital1 comprising ordinary shares and options not already owned by GDG overview ▪ Post transaction, GDG will own
Slide 27: Acquisition overview (cont’d)
Generation Development Group | Acquisition of Lonsec and Equity Raising | 27 Acquisition overview (cont’d) For personal use only Completion ▪ Completion expected in August 2024, subject to customary closing conditions ▪ Financial, tax and business warranties & indemnities customary for a transaction
Slide 28: Equity Raising overview
Generation Development Group | Acquisition of Lonsec and Equity Raising | 28 For personal use only Equity Raising overview
Slide 29: Equity Raising and Conditional Placement
Generation Development Group | Acquisition of Lonsec and Equity Raising | 29 Equity Raising and Conditional Placement For personal use only ▪ Fully underwritten $155.4m Placement and Entitlement Offer (together, the ‘Equity Raising’), comprised of: - $62.0m Institutional Placement (‘Placement’); and
Slide 30: Equity Raising and Conditional Placement (cont’d)
Generation Development Group | Acquisition of Lonsec and Equity Raising | 30 Equity Raising and Conditional Placement (cont’d) For personal use only ▪ Retail Entitlement Offer to raise approximately $29.5m Retail ▪ The Retail Entitlement Offer will open on Friday 7 June 2024 and close on Friday 21 J
Slide 31: Sources & uses of funds
Generation Development Group | Acquisition of Lonsec and Equity Raising | 31 Sources & uses of funds For personal use only Sources & uses of funds Reconciliation to up-front enterprise value $m $m Placement 62.0 Cash to Lonsec shareholders 148.2 Entitlement Offer 93.4 Scrip to Lonsec shareholders 49
Slide 32: Pro-forma underlying P&L
Generation Development Group | Acquisition of Lonsec and Equity Raising | 32 Pro-forma underlying P&L For personal use only (-) Equity accounted (+) Tax impact from (+) Consolidation of = ($m) 12 months to 31 December 2023 GDG investment relinquishment of 100% ownership of Pro-forma GDG in Lonsec PD
Slide 33: Pro-forma underlying balance sheet
Generation Development Group | Acquisition of Lonsec and Equity Raising | 33 Pro-forma underlying balance sheet For personal use only = GDG underlying1 (-) Equity accounted (+) Impact of Acquisition ($m) 31 December 2023 Pro forma GDG 31 Dec 2023 investment in Lonsec and Equity Raising2 31 Dec 2023
Slide 34: Equity Raising Timetable
Generation Development Group | Acquisition of Lonsec and Equity Raising | 34 Equity Raising Timetable For personal use only Event Date Announcement of Acquisition and Equity Raising Monday 3 June 2024 Announcement of results of the Institutional Entitlement Offer, trading resumes on an ex-entitlemen
Slide 35: Update on PDF status
Generation Development Group | Acquisition of Lonsec and Equity Raising | 35 Update on PDF status For personal use only ▪ GDG has applied to have its Pooled Development Fund (PDF) registration revoked PDF status ▪ This revocation is a condition to completion of the Acquisition under the SOSA, as a P
Slide 36: Trading update and FY24 outlook
Generation Development Group | Acquisition of Lonsec and Equity Raising | 36 For personal use only Trading update and FY24 outlook
Slide 37: Generation Development Group outlook
Generation Generation Development DevelopmentGroup Group | |Acquisition Acquisitionof ofLonsec Lonsec and and Equity Raising|| 37 EquityRaising For personal use only Generation Development Group outlook Record sales momentum to be maintained. LifeIncome – Continue to build sales momentum After a rec
Slide 38: Appendices: Risks
Generation Development Group | Acquisition of Lonsec and Equity Raising | 38 For personal use only Appendices Risks
Slide 39: Risks specific to Generation Development Group
Generation Development Group | Acquisition of Lonsec and Equity Raising | 39 Risks specific to Generation Development Group For personal use only GDG derives a significant proportion of its earnings from fees and charges based on the level of funds under management (FUM). The level of FUM will refle
Slide 40: Risks specific to Generation Development Group (cont’d)
Generation Development Group | Acquisition of Lonsec and Equity Raising | 40 Risks specific to Generation Development Group (cont’d) For personal use only Failures or breaches of data protection and systems security can cause reputational damage, regulatory impositions and financial loss. The legal
Slide 41: Risks specific to Generation Development Group (cont’d)
Generation Development Group | Acquisition of Lonsec and Equity Raising | 41 Risks specific to Generation Development Group (cont’d) For personal use only Successful product development in the financial services sector requires a material amount of capital, time, resources and various approvals befo
Slide 42: Equity Raising and Acquisition risks
Generation Development Group | Acquisition of Lonsec and Equity Raising | 42 Equity Raising and Acquisition risks For personal use only GDG undertook a due diligence process in respect of the Acquisition, which, among other things, relied on the review of financial information and other information
Slide 43: Equity Raising and Acquisition risks (cont’d)
Generation Development Group | Acquisition of Lonsec and Equity Raising | 43 Equity Raising and Acquisition risks (cont’d) For personal use only Generation Life’s investment bonds are “highly recommended” by Chant West and were previously “highly recommended” by Zenith Investment Partners for 15 yea
Slide 44: Equity Raising and Acquisition risks (cont’d)
Generation Development Group | Acquisition of Lonsec and Equity Raising | 44 Equity Raising and Acquisition risks (cont’d) For personal use only GDG has entered into an underwriting agreement with the Jefferies (Australia) Pty Ltd (Underwriter) under which the Underwriter has agreed to fully underwr
Slide 45: Lonsec business risks
Generation Development Group | Acquisition of Lonsec and Equity Raising | 45 Lonsec business risks For personal use only Lonsec’s development Lonsec is focused on building its Managed Account product. Although this operating model has been accepted by the regulators and is used extensively by Lonsec
Slide 46: General risks
Generation Development Group | Acquisition of Lonsec and Equity Raising | 46 General risks For personal use only General economic Changes in general economic factors such as economic growth, interest rates, exchange rates, inflation and business and consumer confidence and general market factors may
Slide 47: General risks (cont’d)
Generation Development Group | Acquisition of Lonsec and Equity Raising | 47 General risks (cont’d) For personal use only GDG prepares its general purpose financial statements in accordance with IFRS and the Corporations Act. Australian Accounting Standards are subject to amendment from time to time
Slide 48: Appendices: International Offer Restrictions
Generation Development Group | Acquisition of Lonsec and Equity Raising | 48 For personal use only Appendices International Offer Restrictions
Slide 49: International Offer Restrictions
Generation Development Group | Acquisition of Lonsec and Equity Raising | 49 International Offer Restrictions For personal use only 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 d
Slide 50: International Offer Restrictions (cont’d)
Generation Development Group | Acquisition of Lonsec and Equity Raising | 50 International Offer Restrictions (cont’d) For personal use only Singapore This document and any other materials relating to the New Shares have not been, and will not be, lodged or registered as a prospectus in Singapore wi
Slide 51: Appendices: Underwriting Agreement Details
Generation Development Group | Acquisition of Lonsec and Equity Raising | 51 For personal use only Appendices Underwriting Agreement Details
Slide 52: Overview of the Underwriting Agreement terms
Generation Development Group | Acquisition of Lonsec and Equity Raising | 52 Overview of the Underwriting Agreement terms Jefferies is acting as underwriter and lead manager (Lead Manager) of the Placement and the Entitlement Offer. GDG has entered into an underwriting agreement with the Lead Manage
Slide 53: Overview of the Underwriting Agreement terms
Generation Development Group | Acquisition of Lonsec and Equity Raising | 53 Overview of the Underwriting Agreement terms ▪ ASX announces that the Company will be removed from the official list or that the Shares will be: Delisting ‒ Removed from official quotation; or For personal use only ‒ Suspen
Slide 54: Overview of the Underwriting Agreement terms
Generation Development Group | Acquisition of Lonsec and Equity Raising | 54 Overview of the Underwriting Agreement terms Change in officers ▪ Resignation or termination of the Chief Executive Officer, Chief Financial Officer or the Chairman of the Company occurs. For personal use only ▪ The Company
Slide 55: Overview of the Underwriting Agreement terms
Generation Development Group | Acquisition of Lonsec and Equity Raising | 55 Overview of the Underwriting Agreement terms Trading of all securities quoted on ASX, Hong Kong Stock Exchange, London Stock Exchange or New York Stock Exchange is suspended or limited in a material respect for a whole day
Slide 56: For personal use only
Generation Generation Development DevelopmentGroup Group | |Acquisition Acquisitionof ofLonsec Lonsec and and Equity Raising|| 56 EquityRaising For personal use only