American private equity firm Flexpoint Ford has entered into an agreement with the independent directors of British wealth consolidator AFH Financial Group on the terms of a £224.5m ($307m) offer to acquire the latter.
The all-cash offer, subject to shareholder and regulatory approval, will see Flexpoint Ford pay 463p in cash for each AFH share.
The transaction will be carried out through Bidco, a newly incorporated company formed for the purposes of the acquisition. It is indirectly controlled by funds managed by Flexpoint.
AFH’s ambitious move to rekindle growth strategy
West Midlands-based AFH noted that its ability to access both equity capital and debt funding for growth on reasonable terms in a timely manner has faced challenges on the public markets in recent years.
The company, which has made 50 takeovers in five years, decided to put a pause on its acquisition strategy in 2019 due to the uncertain political and economic landscape.
The acquisition by Flexpoint is anticipated to help AFH regain its growth trajectory and provide it with several other strategic benefits in areas including digital marketing and systems investment.
The company said that the partnership with Flexpoint will assure the successful delivery of the growth strategy and unlock the full potential of the group over the long-term.
Flexpoint specialises in financial services and healthcare sectors, with expertise in both minority and control structures throughout the private and public companies.
The firm has raised over $4.3 bn in capital and has made more than 30 investments since 2005.
AFH chairman John Wheatley said: “The Independent Directors believe that the terms of the Acquisition are compelling, acknowledge the quality and strong prospects of AFH’s business and deliver attractive value to AFH Shareholders in cash, allowing them to crystallise the value of their holdings.
“Looking ahead, the Independent Directors believe that Flexpoint and Bidco will be excellent partners to AFH and support the continued growth of the business and that the Acquisition is in the best interests of all stakeholders of the Group.”
AFH Financial Group CEO Alan Hudson added: “We believe the offer reflects our strong track record of increasing shareholder value, Flexpoint’s endorsement of our strategy and confidence in the continued success of AFH, as well as further investment required in the business.”
Commenting on the deal, Flexpoint managing director Daniel Edelman said: “Since its founding more than 20 years ago, AFH’s management team has demonstrated long-term growth both organically and through acquisitions.
“Flexpoint shares the management team’s vision for growth and believes the next phase of AFH’s development would be better conducted in the private domain. We believe our partnership will strengthen the business and look forward to supporting management in the future.”
Recent moves by AFH
In November 2019, AFH acquired Warwickshire-based Groom Associates for a maximum consideration of £615,000.
The same year, the company acquired Wirral-based Broadleaf Financial Services, followed by its purchase of two IFA businesses for a maximum consideration of £7.2m.
In 2018, AFH announced plans to raise £15m through a placing to fund acquisitions.