Shares in advice-led wealth manager AFH Financial (AFHP:AIM) leapt 14% to 452p after independent directors to the firm announced they had agreed an all-cash takeover by US private equity investor Flexpoint Ford at 463p per share, a 16.5% premium to last Friday’s closing price and a 40% premium to the price before talks began in December.
According to AFH’s directors, pairing with Flexpoint ‘will assure the successful delivery of the growth strategy and unlock the full potential of the group over the long term’.
AFH has grown rapidly since floating on AIM in 2014 thanks to a series of acquisitions.
However, the firm said 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, which has slowed AFH’s growth meaningfully relative to those privately-owned competitors which have been able to scale their businesses, both organically and through M&A, at a faster pace’.
Flexpoint is a US-based investment firm with holdings mainly in insurance and healthcare, so the acquisition of AFH marks the firm’s first deal in the financial advice market.
AFH’s directors argue that the offer price reflects ‘both the value created by AFH’s strategy to date, as well as the value that this strategy is expected to generate in the future’.
So far AFH has received support from shareholders representing 33% of the firm’s share capital, while the independent directors representing a further 14% of the share capital have also pledged their support, which remains binding even in the event of a rival offer for the firm.