The HUB24 Ltd (ASX: HUB) share price won't be going anywhere today after the investment platform provider requested a trading halt prior to the market open.
Why is the HUB24 share price in a trading halt?
HUB24 requested a trading halt this morning so that it could launch a $60 million equity raising to fund three strategic transactions.
According to the release, the company is aiming to raise these funds via a fully underwritten institutional placement to raise $50 million and a $10 million non-underwritten share purchase pan.
These funds will be raised at a fixed price of $20.00 per new share, which represents a 4.6% discount to HUB24's last close price of $20.97.
What is HUB24 acquiring?
HUB24 is using these funds for three strategic transactions which it believes will strengthen its position as the leading provider of integrated platforms, data, and technology services for financial advisers, stockbrokers, private banks, licensees, accountants and their clients.
These transactions comprise the acquisition of investment platform provider Xplore Wealth Ltd (ASX: XPL), the acquisition of Ord Minnett's non-custody Portfolio Administration and Reporting Service (PARS), and an increased investment in integrated accounting and wealth solutions provider Easton Investments Ltd (ASX: EAS).
What are the details?
HUB24 has agreed to pay $60 million in cash and scrip to acquire Xplore. This equates to a price of 20 cents per share, which is a massive 203% premium to its last close price.
The release explains that the company has agreed to pay $10.5 million in cash for Ord Minnet's PARS business.
And finally, HUB24 has agreed a cash consideration of $14 million and the divestment of its Paragem business to Easton Investments. This will result in the company's shareholding increasing to up to 40% in the company. The new Easton Investments shares will be issued at a share price of $1.20, which represents a 38% premium to its last close price.
The total investment for these transactions is approximately $93 million. HUB24 expects them to deliver approximately 13% earnings per share accretion in FY 2022.
In addition, management notes that transactions will increase the funds under administration (FUA) across the combined company to $42 billion ($28 billion in custody and $14 billion in non-custody). It will also introduce additional capability to HUB24's market leading platform.
Management also believes that HUB24 will benefit from the addition of new relationships, including two significant new clients who have indicated that these strategic transactions represent a positive outcome for their advisers and their clients.
