WT Financial Group (ASX:WTL) acquires Synchronised Business Services


by Lauren Evans

WT Financial Group Limited (ASX:WTL) Founder and Managing Director Keith Cullen discusses the acquisition of Synchron and what this means for WT.

Lauren Evans: Hi, this is Lauren Evans for the Finance News Network. Joining me today from WT Financial Group (ASX:WTL) is Founder and Managing Director Keith Cullen. Keith, it's nice to meet you.

Keith Cullen: Yeah, nice to meet you too, Lauren, and thanks for having me on

Lauren Evans: Now, for those that are tuning in for the first time, can you give us an overview of the company?

Keith Cullen: Yeah, sure. WT Financial Group was established in 2010, and we started with an initial focus of providing direct-to-consumer services around financial advice, tax and accounting, and mortgage broking. And, over time, we developed that business to the point where we thought we could take that out on a bigger scale through what is called a traditional dealer group structure, where the dealer group provides services to financial advisors that run their own practices, but they're operating under our licence and accessing our education and training, our compliance infrastructure and these such services, consumer education services and the like. And our initial entry into the space was through the acquisition of a small dealer group called Wealth Today. And then, last year, we acquired another dealer group called Century Group, and that took us to around 250 advisors across the country.

Lauren Evans: So now to the news of your acquisition, can you tell us more details about this, and what does this mean for your advisor numbers?

Keith Cullen: Yeah, I'd be glad to. It's a very significant acquisition -- I think not just for WTL, but also for the industry as a whole. We've announced the acquisition of Synchron, which has been Australia's largest privately owned dealer group. And for our advisor numbers now, this will see us with in excess of 600 advisors across all of our brands, across the Wealth Today, Century Group and now Synchron brands. And so that positions us as the largest non-institutional sort of non-product-producing dealer group in the country, headed only by IOOF and AMP.

Lauren Evans: Now, what are the financial implications for the company and its shareholders?

Keith Cullen: Yeah. Good question. I'll start with what we are paying in terms of the acquisition. So, the company has agreed to pay the vendors up to $7.95 million, which will be in part cash, part shares, and that's payable over the next couple of years. And then, in terms of the impact on the company from a revenue and profit perspective, we've provided guidance for FY23 of a significant increase in revenue to around $170 million. We're expecting EBITDA to exceed $5 million and to be able to deliver a net profit after tax of $4 million. So, that's really a sort of doubling of what our guidance for this year has been. And we've been well on track with our guidance with our results for the first six months.

Lauren Evans: So, WT Financial announced a capital raise and the establishment of a debt facility. Can you talk us through this?

Keith Cullen: Yeah, thanks Lauren. That was completely structured around putting us in a position to be able to settle this transaction. And I'll start with the capital raises. We've been able to raise a little over $3 million. We did that at a placement price of 10 cents, which was a better than 20 per cent premium of our 30-day VWAP. So, we were delighted with the way that our institutional and professional investors supported the bookbuild that we did on that. And I think it really underscored the significance of the transaction and the value that people are seeing in it. And then also we've structured a debt facility with Altor Capital, who we've worked very closely with to put in place a facility that will provide us an initial $4.7 million, with an undrawn line of an additional $2 million should we need it. And the key to that for us was being able to really limit the amount of shares that we needed to put out to really maximise the accretion for existing shareholders.

Lauren Evans: Now, is there anything else that you'd like to add today before we wrap up?

Keith Cullen: In addition to the impact for shareholders and the industry generally, our real focus in the business is making sure that we're building a proposition that delivers for financial advisors. They've had a lot of changes thrust upon them in the last few years -- changed educational standards, new legislation, additional compliance requirements. And, for us, it's really important that, at this critical time, they've got the right level of experience to support them through that transition. We're right on the doorstep of the greatest intergenerational wealth transfer in Australia's history, with some $3.5 trillion about to pass from one generation to the next. So, the complexity of advice that Australians are requiring needs their advisors to have the support of a strong dealer group. And we think we're well on the path to providing the best proposition for them.

Lauren Evans: Thanks for your time today, Keith. Congratulations, and I look forward to hearing from you again later in the year.

Keith Cullen: Thanks so much, Lauren. I really appreciate it.


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