Matrix Financial Solutions sales talks are progressing, with investment memorandums (IM) sent out to a number of parties, but industry speculation that SFG Australia is a front-running bidder are unfounded, according to the head of the advisory team overseeing the sale.
PricewaterhouseCoopers (PwC) head of financial services mergers and acquisitions Stuart Goddard said the firm continued to engage with buyers “across the sector”.
“There’s no front runner in any way. We’re keeping momentum in our discussions with all parties,” Goodard said.
Market sources said PwC, which is running the sale process, had held talks with SFG Australia. However, those talks had since cooled.
Matrix declared itself for sale last October and the dealer group’s adviser on the sale, PwC, sent IMs about six weeks ago to potential buyers believed to include SFG, two other financial advisory groups – including an aligned network – and an industry superannuation fund.
The dealer group is 90 per cent owned by its 107 advisers in 44 practices, who oversee about $2.6 billion in funds under advice (FUA).
Larger dealer groups have been selling for eight to 10 times a group’s earnings before interest, depreciation, amortisation and tax, a range dictated by the synergies a target can offer a potential buyer.
In the run-up to the implementation next year of the government’s Future of Financial Advice reforms, institutions and larger independent groups, such as SFG, have been scrambling to buy scale and distribution capabilities.
Dealer groups that offer institutions a chance to broaden their product distribution command a premium. For example, Commonwealth Bank of Australia paid $373 million last year for Count Financial, which had 660 advisers and nearly $9 billion in FUA.
However, in most cases, buyers pay an acquired dealer group over several years and the length of the payout period, which effectively transfers risk to the seller, can be an obstacle.
Another source said platform migration was sometimes a sticking point.
Matrix and SFG both have money on the BT Wrap. However, most of Matrix’s platform investments sit on Oasis, while SFG’s funds are spread across a number of platforms besides the BT offering, including Colonial First State and Asgard.
SFG, the result of merger between Shadforths and Snowball, has about $12.5 billion in FUA.
