Fintel joint chief executive officer Matt Timmins said the firm’s cash surplus of £7.6mn will support future acquisitions.
Last month, Fintel reported a 2 per cent uptick in total revenue growth, delivering “solid financial performance” in the first half of the year.
In the six months to June 30, Fintel, which rebranded from The SimplyBiz Group last year, reported total revenue growth of £32.2mn, up from £31.7mn in the same period last year.
The group also reported that it had “significant financial resources” with £7.6mn cash, a change from the £15.5mn debt last year.
Speaking to FTAdviser, Timmins said there are two primary purposes for the cash that it has, which consists of £7.6mn cash and an undrawn £45mn revolving credit facility (RCF) as well.
“That allows us to do two things,” he said. “One is to invest into the products and services within the business, so investing into the Defaqto fintech, investing into the creation of new modules and other technology within both SimplyBiz and Defaqto.
“[The second is] having a significant amount of financial reserves and happy shareholders as well to help support future acquisitions. So it's a combination of investment into the business and acquisitions to support the two key brands, SimplyBiz and Defaqto.”
We have already started to onboard Tatton firms onto the Defaqto software which Tatton are making available free of charge to their customers.Timmins explained that Fintel is “very active” and constantly looking at businesses that it thinks can either provide additions to its customer base, for example new customers coming in, or businesses that have technology or services that will be useful to intermediaries.
“It's a constant ongoing programme,” he said. “We've got the £45mn RCF facility so we're able to make acquisitions with confidence, of varying different sizes, and we continue to investigate good businesses that we might want to buy.”
Types of acquisitions
The types of firm Fintel is looking at would fall into three key categories, Timmins explained.
The first would be companies that do something similar to SimplyBiz, such as providers of regulatory support and services to intermediaries.
The second category would be firms or businesses that have technology used by intermediaries, such as fintech businesses.
“The third would be businesses that have a particular skill set in data and data application,” he said.
“Two of those obviously are very sector focused and the first two - support services and fintech - we are concentrating our conversations on businesses within retail, financial services within the market we deal with.
“Then the data business doesn't have to be sector specific but it has to have skills that can be applied across retail financial services.”
Timmins explained that at any point, the firm could have up to half a dozen conversations on the go but that it depends on the month and the type of business.
While Fintel is seeking businesses to acquire, the group does not have a target number in mind and said the quality of the business is much more important.
Overall it's been a bit of a benchmark deal for us in terms of what two businesses can achieve when they both concentrate on what they're really strong at. “What we do have is significant financial resources that will enable us to make a large acquisition or a number of smaller acquisitions,” he said.
“We don't have a particular target number in place. We have a target to do this to effectively deploy capital to those businesses that will better support and enhance our customer set.”
Tatton - Fintel partnership
In September 2021, Tatton Asset Management bought the Verbatim funds from Fintel, formerly known as Simplybiz, for £5.8m.
As part of the transaction, Tatton entered a five-year strategic distribution partnership with Fintel which will provide it with access to 3,800 financial intermediary firms and its 6,000 Defaqto users.
In the half year results last month, the group said the strong balance sheet was following the strategic divestment of non-core Zest Technology and Verbatim funds and the continued strong cash generation of the business.
Timmins told FTAdviser that Fintel is “very pleased” with the relationship with Tatton Asset Management and said the firms have worked very hard behind the scenes.
“Tatton are presenting and have presented to the Simplybiz membership on their DFM solution and we have been out presenting to the membership on the Defaqto software,” he said.
“We have already started to onboard Tatton firms onto the Defaqto software which Tatton are making available free of charge to their customers.
“The deal is working extremely well between the two parties.”
From a financial point of view, Timmins said it has already replaced the revenue that it lost through the sale of Verbatim and is “confident of the positive financial impacts” on the business.
“Overall it's been a bit of a benchmark deal for us in terms of what two businesses can achieve when they both concentrate on what they're really strong at,” he said.
sonia.rach@ft.com
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