Long-running ownership uncertainty surrounding financial planning group Centric Wealth has ended after its board unanimously approved an 8.9c-a-share takeover bid from Financial Index Wealth Accountants.
The founder and chief executive officer of FIWA, Spiro Paule, said in a statement that “the combination of the two businesses creates one of Australia’s largest, non-aligned financial advisory organisations”.
“We are both focussed on providing the best possible advice and solutions to our clients,” Paule said.
“We will be able to share respective areas of expertise and offer clients and employees a greater level of sophistication and opportunity.”
The full statement from FIWA is available here.
The bid is reported to value Centric at less than the $150 to $200 million mooted when it was announced in July that 75-per-cent shareholder CHAMP Private Equity planned to sell its stake.
The announcement of the deal ends a six-month process of due diligence and negotiation that Centric chief executive officer Phil Kearns described as “not a fast deal”.
“A lot of work has gone into it and I think everyone is happy with the result,” Kearns told Professional Planner. In the absence of a better offer the bid will proceed as outlined by way of a scheme of arrangement.
“That will all be approved, and away we go.”
Kearns says there have been no discussions to date about his ongoing role with the enlarged group.
“We have not got that far yet,” he said.
“But I do know that they like the Centric brand. They would like to keep it together, and they have bought a business that has inherent value. It has quite a lot of value, actually. It’s not just something that they will pull apart.
“Centric will continue to be a high-net-worth, strong wealth management business. It’s never been in their mind just to tear it apart.”
Kearns says that after the deal proceeds, Centric clients will “continue to see the same advisers”.
“It’s not a process of getting rid of advisers; they are the real strength of the business, whether it be in our risk or our lending businesses, or in financial planning businesses,” he says.
“Clients will still see the same advisers – that gives them greater certainty, and it gives the advisers greater certainty. So it really is a win all round.”
Kearns says there are “some great opportunities” for the merged businesses to create back-office linkages to improve efficiency and service.
He says this deal illustrates the view that “the right strategy to be going forward is the combination of accounting and financial planning businesses”.
“We saw that SFG tried to do something with WHK, and in that case one was a pure financial planning business and one was a pure accounting firm,” he says.
“In this case, Findex already do accounting and they already do financial planning. With the other mob it was black and white; in this case it’s a bit more grey, because they already do mixture of both.
“In many cases, financial planners and accountants are worst enemies, but the best outcome for clients is where financial planners and accountants work together, and that’s something that we firmly believe. We try to work closely with our clients’ accountants, without being accountants ourselves.
“If you truly believe in the best outcome for a client, it’s getting those two parties to work together. And the model we will have moving forward, that’s hopefully what our clients will get.”
