Finexia acquires stockbroking and advisory team from Everblu Capital in a new milestone for future growth

Private credit specialist Finexia Financial Group (ASX: FNX) has acquired the Sydney-based equities stockbroking and trading team from Everblu Capital in a strategic move that expands its services and client base in the sector and paves the way for a significant deal pipeline for the company.

Finexia, which has been buoyed by a strong financial performance in FY23 including payment of its first dividend, says the $1.1 million acquisition will complement the company’s existing Sydney-based securities dealing business while driving operational synergies for the merged operations.

Following completion of the deal, Everblu’s team of brokers will operate under the Finexia brand as the operations are integrated into the company’s existing operations.

Finexia CEO Patrick Bell says the Everblu strockbroking and trading team brings with it an extensive client base that provides Finexia with an opportunity to expand distribution channels for its suite of products and services, specifically private credit opportunities including managed funds.

“The key benefit from the acquisition is not only the expansion of our Sydney advisor base and Everblu’s network of clients, in step with our legacy equity capabilities, but it is also a seed for a more intensive representation on the ground for private credit,” Bell says.

“The Everblu acquisition offers several accretive benefits to our business, including increased revenue, whilst remaining aligned with our overall core strategy of private credits and funds management.”

Finexia notes that the transaction has been structured as a business acquisition of the Everblu equities and advisory team and does not include the corporate entity, licences or the corporate advisory arm, Everblu Capital Corporate, which will continue to operate as a separate entity.

However, Bell says Finexia will have exclusive access to deal flow originated through Everblu Capital Corporate which has been involved in total transactions of more than $1 billion.

“Everblu Capital Corporate has a long history of putting together quality deals and this represents an important milestone for Finexia in terms of our deal flows over the longer term,” Bell says.

“The financial impact of the acquisition this year will be modest, and that is a reflection of where the equity markets are at the moment, but as conditions improve, we see that lifting in future.

“This is a key milestone for our company as part of a growth and diversification strategy we have put in place for the company in recent years.”

The acquisition of Everblu Capital's stockbroking and trading team is expected to deliver synergy benefits for Finexia’s existing stockbroking operations through operational cost savings, increased revenue and an expanded client base.

The acquisition of Everblu Capital is being facilitated through cash and scrip with milestone progress payments dependent on Everblu reaching agreed performance targets.

The $1.1 million consideration for Everblu will comprise a $600,000 upfront payment representing a multiple of one year’s revenue.

This payment consists of $200,000 worth of Finexia shares, issued at 40c per share and escrowed for 12 months, plus $200,000 in cash and $200,000 invested in Finexia products. Finexia shares last traded about 29.5c.

Finexia, a specialist private credit provider backed by funds-management experience, operates three business segments - Private Credit, Funds & Asset Management, and Equity Capital Markets - all of which performed strongly in FY23.

Finexia grew its average interest-earning assets, which are comprised of the private credit loan book and group investments, by 78 per cent to $123 million during the year. This reflects strong growth across its key products, namely The Stay Company Income Fund, the Childcare Income Fund and Prime Asset Backed Lending, of which $70 million is off balance sheet.

The company announced a net profit of $3.21 million for FY23, leading to a maiden final dividend of 2c per share from earnings of 8c per share.