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AFH looks to raise another £15m to buy more IFAs

Advice firm consolidator AFH is looking to raise £15m to fund more acquisitions by offering new shares in the company.

It will sell new ordinary shares in the company at 370p a share in a quickfire offering, with the proceeds used to “execute the company’s acquisition pipeline”, AFH said in a stock market announcement today.

The “accelarated bookbuild” is open with immediate effect.

AFH has already bought up 16 IFA businesses in the last year, spending around £16m up front. Future buyout payments could amount to roughly the same amount if the firms hit their performance targets.

AFH says: “The board intends to continue to execute its strategy of making selective acquisitions and increasing AFH’s national footprint, while providing a professional and cost-effective service to its clients.

“The board believes that the company remains well positioned to take advantage of consolidation opportunities in the IFA market and currently has a strong pipeline of potential acquisitions that are under negotiation and in due diligence. The company is undertaking the placing to provide it with a strong platform to finance such acquisition opportunities.”

AFH shares are currently trading at around 400p, more than three times higher than when it listed on AIM at 149.5p in June 2014.

Which consolidator has the winning model?

According to its last accounts, flows from acquisitions were roughly twice the flows coming from existing business at the firm.

While it noted “unrestricted cash assets in excess of £20m”, that same year acquisitions were estimated to cost it £18.7m.

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