The $80 million private placement by Centric Wealth values the group at a lower price than the failed rights issue of last year.
The private placement announced by Centric Wealth earlier this month values the group at a lower price than the failed rights issue of last year, after the financial crisis impacted the group's funds under management (FUM).
Centric Wealth has agreed to place a 75 per cent stake with a subsidiary of Champ Private Equity for $80 million.
The transaction comes after a $100 million rights issue, announced in October last year, was ended by Champ following the dramatic decline by the financial markets.
"The earnings of Centric have not been affected substantially, but the financial planning earnings have been affected by the FUM's downwards movement," Champ Private Equity managing director David Jones told InvestorDaily yesterday.
"The other thing is, multiples have moved materially over the last half year."
Although the two transactions differ in structure, the price paid for Centric's shares on a like-for-like basis is less under the current deal.
"We have agreed on what is effectively a lower price," Jones said.
But he said it was a sign of the times, as opposed to Champ being uninterested in the group.
Overall, Centric has done better than many of its competitors. Over 2008 the group reported earnings before interest, taxation, depreciation and amortisation (EBITDA) of $18 million, Centric chief executive Michael Pillemer said.
It is also on track to report EBITDA in excess of $20 million in the current financial year. The group has also benefited from growth in its accounting and insurance advisory businesses.
"We're a diversified business and 50 per cent of our revenues have no market exposure," Pillemer said.
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