The SimplyBiz Group has agreed to buy fintech business Defaqto for £74.3m, as it looks to expand into the banking and general insurance sectors.
In a statement released this morning (March 20) the compliance provider announced it was buying the entire issued share capital of Regulus Topco Limited, the owner of Defaqto.
In 2018 Defaqto generated revenues of £12.8m and the acquisition will include the purchase of £3.4m of cash on the fintech company's balance sheet at completion.
The purchase is set to help SimplyBiz advance its services into the general insurance and banking markets, whilst also offering Defaqto support in the advisory and asset management sectors.
Defaqto's platform provides independent ratings of 21,000 financial products and funds, licensed by 230 brands, for about 8,500 adviser clients.
SimplyBiz intends to finance the £74.3m acquisition and its associated expenses of £2.9m, through a primary placing of new ordinary shares to raise £13.8m and a vendor placing to the value of £15.3m.
The group will also issue new consideration shares to the value of £7.5m, borrow £37.5m from new bank facilities and use £3.1m from the company's cash resources.
The acquisition is conditional, among other things, on the share placings.
Neil Stevens and Matt Timmins, joint chief executives of The SimplyBiz Group, said: "We are delighted to announce the successful acquisition of Defaqto, which will play an important role in building on the group’s strong momentum and enabling us to unlock a wide range of additional growth opportunities.
"Having long respected the Defaqto management team, we also recognise not just the strong strategic fit of the business, but also its cultural alignment.
"Defaqto is a business built upon industry leading talent and we look forward to working with our new colleagues as we continue to enhance services to financial intermediaries and product providers and deliver value for shareholders."
Zahid Bilgrami, chief executive of Defaqto, said: "We are absolutely delighted with SimplyBiz’s decision to acquire Defaqto. It opens an exciting new chapter in our development as a leading financial information business, and we look forward to the many opportunities that being part of a larger group will present.
"While it will enable us to continue operating in an independent and autonomous manner, it will also carry many advantages of being a part of a listed entity.
"It will enable us to develop new technology faster, and thus continue to develop market-leading products for our clients at a time of vast technological change in the financial services sector."