Mergers and acquisitions  

AFH on acquisition drive in 2021

AFH on acquisition drive in 2021
 Credit: Chris Ratcliffe/Bloomberg

AFH Financial Group is on the hunt for valuable buying opportunities in 2021, having pulled out of the acquisition market for much of 2020 due to the coronavirus pandemic.

In its yearly results to October, published to the stock exchange today (January 18), the national advice consolidator said the expansion of the AHF community remained “at the heart” of its growth plans.

Chief executive Alan Hudson said: “While in 2020 the company withdrew from the acquisition market in order to consolidate its previous growth and to strengthen its balance sheet [...] our strategy of combining organic growth [...] with value accretive acquisitions financed on an earn out model remains unchanged.”

AFH suspended its acquisition drive in June last year as it changed tack to focus on “cash generation and organic growth” in light of the coronavirus pandemic.

It was the second time the consolidator had pulled out the market, having halted acquisitions in September 2019 due to economic and political uncertainty before returning to the trail with a £17.3m warchest in March.

Today’s results also showed the group was beginning 2021 with a bolstered workforce, having grown its employed adviser base throughout 2020.

Mr Hudson said: “This strategy has allowed us to broaden our appeal in the IFA market and recruit in a challenging market where demand continues to exceed supply.

“[AFH has] entered 2021 with a strong pipeline of employed advisers who are scheduled to join AFH in the first calendar quarter of 2021, providing a significant boost to our capacity and geographic penetration at a time when the need for professional financial planning is expected to be at exceptional levels.”

AFH reported funds under management of £6.2bn as at October 31, 2020 — in line with £6.2bn reported in November 2019 — and its profit after tax had also stayed constant, at £10.8m.

The group’s revenue was up 4 per cent to £77m while its underlying EBITDA increased by 5 per cent to £18m.

Mr Hudson said the group’s new business revenues had been “significantly” impacted by the uncertainty caused by the coronavirus, and the reduced opportunities for advisers to meet and establish new relationships with clients.

This, in turn, stifled inflows into new portfolios.

Mr Hudson added: “The company continues to focus on the long-term needs of its clients and on reducing their overall cost of investing. 

“Our clients entrust us to help them meet their financial planning objectives and we recognise that over a period of 20 years or more the cost of investing can represent a material cost compared to the original investment. 

“For this reason, the company uses its size and buying power for the benefit of its clients.”

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