AWI released a statement on the Australian Securities Exchange (ASX) yesterday that it had entered into a heads of agreement to buy “another online financial services business” for a cash consideration of $10.5 million, plus $2 million of AWK shares.
Speaking to InvestorDaily, Mr Barnes said the vendor in the transaction does not want to disclose the transaction “at this stage”.
“We’re under confidentiality. We can only disclose that if the ASX insists that we do so – and they haven’t at this point,” he said.
The new acquisition is a continuation of AWI’s attempt to build “what is essentially a post-FOFA financial services business”, said Mr Barnes.
AWI, which was previously known as the Merrick Capital Special Opportunity Fund, has been targeting the local wealth management market since UK-based Mr Barnes acquired a 19.9 per cent stake and an accompanying management contract via Aurora Funds Limited in March 2013.
The entity purchased a 49.6 per cent stake in retail research house van Eyk on 8 April 2013, as well as 100 per cent of Fairfax’s online financial service portal InvestSMART on 30 September 2013.
The changes to the way financial advisers are remunerated under FOFA makes it harder for ‘mum and dad’ investors to access advice, he said.
“It’s about helping investors work out what it is they should invest in. Rather than the ‘how’ … [we want to] give them tools to help them make informed decisions as to how they invest their money,” said Mr Barnes.
The business model requires three components, he said: independent research; tools for clients (such as asset allocation tools, risk profile tools and portfolio selection tools) as well as a fund management operation if clients require it; and a direct-to-consumer component.
“van Eyk provided us with two of those, and InvestSMART provided us with the first of the direct components,” said Mr Barnes.
AWI is interested in acquiring the balance of van Eyk’s shares, he said – but it is not a priority for the firm, given that the opportunity to take over the research house is “unlikely to go away”.
“When opportunities in the market arise that reinforce what we’re trying to do [in the self-directed space], we should probably target those first,” he said.
AWI has an annual general meeting scheduled for 28 November 2013 when (subject to shareholder approval) the company will buy back Mr Barnes shares, cancel his management contract and cease to be a listed invested company.
“Then we will become a proper listed operating company, operating businesses we wholly own as well as some investments in the wealth space,” said Mr Barnes.
