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AFH buys two IFAs in £7.2m deal

AFH buys two IFAs in £7.2m deal

AFH Financial Group has acquired two IFA firms for £7.2m in deals which will add £215m of funds to the wealth manager. 

In a statement to the market this morning (September 13) AFH announced the purchase of Twickenham-based Mulberry Independent Financial Advisers Limited and Hemel Hempstead-based AE Garment Independent Financial Services Limited.

The acquisitions will push the company's total funds under management above £5.6bn and follow a £15m fundraise in July of this year. 

AFH has agreed to pay a maximum £5.3m for Mulberry, with an initial payment of £2.3m and the rest payable over a 26-month period and dependent on the performance of the business. 

Mulberry's four advisers, including its current directors, and support staff will join AFH as part of the deal, bringing across their clients and £170m of funds under management. 

The wealth manager agreed an acquisition price of £1.9m for AE Garment, with an initial payment of £1m and the rest due over a 26 month period and subject to the business meeting performance targets. 

AE Garment's principal, Tony Garment, retired from the business as part of the deal and his clients have been transferred to existing AFH advisers. 

In May AFH reiterated its commitment to providing an exit for retiring IFAs in the market, when it also announced a 68 per cent jump in funds under management for the group. 

Alan Hudson, chief executive of AFH, said: "Notably, the acquisitions have been completed on attractive, value-enhancing multiples, in line with our business model and those negotiated in previous transactions.

"We continue to undertake due diligence on the pipeline of acquisition opportunities that were referenced in the placing announcement and look forward to updating the market in due course."

He added: "The company continues to enjoy strong organic inflows of funds from existing and new clients with low redemptions.

"During the current year double digit gross inflows continue to be achieved whilst outflows, including pension drawdowns, remain below 2 per cent."

Mr Hudson said following the company's placing in July it had retained "significant levels" of cash and remained "well placed in this period of economic and political uncertainty". 

In its full year results published in January AFH reported a 94 per cent increase in profits after tax from £3.1m in 2017 to £6m last year, exceeding its own target predictions

In the results, which followed 16 acquisitions last year, the wealth manager set new three to five year targets, hoping to achieve funds under management of £10bn, revenues per annum of £140m and underlying EBITDA margin of 25 per cent on revenue.

rachel.mortimer@ft.com 

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