ITS Capital Investments has agreed to buy wealth management company Yellow Brick Road (YBR).
ITS said in a statement that it will acquire all of YBR’s issued capital by issuing up to 99.3 million shares, subject to certain conditions including ITS shareholder approval and a public capital raising which must raise at least $6 million.
The transaction estimates that YBR has an enterprise value of $28.7 million.
The release did not mention who would lead the combined entity.
“It is envisaged that upon successful conclusion of the transaction, ITS would cease its current operations and future operations would consist solely of the activities of the YBR group of companies,” ITS said.
ITS’s core business was its migration advisory unit, which was sold off in August.
“ITS has since been seeking new commercial activities to enhance shareholder value,” it said.
YBR was established in 2007 by Mark Bouris and provides wealth management advice, products and services to Australian retail and small-to-medium enterprise clients.
The group’s branch numbers have risen from 16 at the start of 2010, to 46 currently.
“Whilst YBR is in an early stage of its development, it has already built a retail footprint of 46 retail branches and a product platform via relationships such as that with Gateway Credit Union,” ITS said.
“Following completion of the transaction, YBR plans to continue to aggressively roll-out branches across the country and enhance its key product offerings.
“YBR has stated its position to be a ‘disruptor’ brand, challenging the established banks in the wealth management and mortgage markets in Australia.”
The statement said that the transaction is subject to a sunset date of 30 April 2011, by which time all conditions must be satisfied.
ITS and YBR were not available for further comment.
