Australian investment management company Praemium is set to acquire wealth management platform Powerwrap for $55.6 million through an off-market conditional takeover. Praemium already owns 15.1% shares of Australia-based Powerwrap and now it aims to buy out the remaining 85% via a $15 million term loan facility.
The two companies have entered a bid implementation agreement on 9th July 2020. With the combined funds of over $27 billion, the merger will create one of Australia’s biggest independent specialist platform.
Details of the merger
Praemium will purchase the remaining 85% of Powerwrap at an indicative price value of 26.44 cents per share. The price represents a 51% premium on the Powerwrap’s last closing share price. It also represents an 82.3% premium on the 2-month volume-weighted average price (VWAP) of $0.145 and on the 6-month VWAP of $0.111. Powerwrap shareholders are to receive a 7.5 cent per share and 1 Praemium share for 2 Powerwrap shares.
This isn’t the first time Praemium has shown interest in buying Powerwrap. Its first attempt was in 2017 when it was 1 of the 3 interested parties. The deal didn’t close as Powerwrap decided to get listed on the ASX instead.
Barry Lewin, Praemium chairman, said the proposed bid is an exciting opportunity for shareholders of both the companies.
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The merged platform by Praemium & Powerwrap
The merged entity will be the only financial adviser platform that will operate in Australia, the United Kingdom and other offshore markets. Together, the companies are expected to have greater operational and financial scale. Mr Lewin said combining the capabilities and resources of Powerwrap and Praemium will increase the business’s international reach and scale. He adds that the company will be in a stronger position to fulfil the complex requirements and needs of advisers with High Net Worth (HNV) clients.
Wealth management platform Powerwrap focuses on the HNW market segment. It has assets of more than $2 trillion in 460,000 investors and its average account size is of $1.9 million. The Australian platform offers sophisticated investment solutions and has access to more than 250 international and domestic bonds. Its fund under administration value is of $7.9 billion which is believed to be the largest investment product menu in the market.
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