Praemium has announced the £35 million ($61.7 million) sale of its international business to Morningstar has now been completed.
Originally announced in December, the divestment sees Morningstar acquiring Praemium’s operations in the United Kingdom, Jersey, Hong Kong and Dubai to allow the firm to focus its financial and leadership resources on the domestic market.
“We are delighted to achieve this milestone in our history and this successful divestment will allow Praemium to focus on the enormous opportunity that the Australian wealth market offers,” Praemium CEO Anthony Wamsteker said in a statement.
“Morningstar has been a tremendous partner as we have worked collaboratively through the sale conditions, and is an ideal owner of the international business. We wish them well.”
Praemium said that the transaction is expected to result in a gain on divestment which will be recognised as a one-off item in its FY22 financial results and noted that the final gross proceeds were subject to finalisation of post completion adjustments.
The firm intends to return surplus net proceeds of approximately $50 million to shareholders after consideration of likely future investment and liquidity needs and prevailing exchange rates.
This will be completed through an on-market buyback of up to 10 per cent of Praemium’s issued capital equivalent to $23.6 million as well as a fully franked special dividend of $0.05 per share equating to $25.6 million.
“The proposed capital management initiatives provide an attractive outcome for Praemium’s shareholders through a combination of cash return and the benefits of earnings per share accretion from the reduction in share outstanding from the buyback,” said Mr Wamsteker.
“In addition to the special dividend, with this transaction now simplifying the business, the board is also in a position to commence a sustainable dividend policy and will announce those details in due course.
Praemium said it would support Morningstar in completing transitional workstreams that are expected to be finalised on or before 31 December 2022.
As part of the acquisition, Morningstar plans to rebrand Praemium’s platform, which is used by nearly 500 advice firms, to Morningstar Wealth Platform internationally.
“We are excited to welcome more than 100 new colleagues to Morningstar and expand our ability to offer advisers technology-enabled flexibility and choice,” commented Morningstar wealth management solutions president, Daniel Needham.
“The Wealth Platform and Wealthcraft are powerful tools that reduce friction and save time so advisers can serve more investors – and in more extensive ways than they do today.”
According to the firm, the end-to-end Morningstar Wealth platform will add to the data, research, portfolio analytics and investment management capabilities already offered by Morningstar and its subsidiaries.
Praemium UK and international MD Mark Sanderson, who will now report to Mr Needham, said that it had found a home with a long-term vision in Morningstar.
“Morningstar understands that our fast growth has come from a relentless focus on delivering for our customers, and as part of Morningstar, we will only accelerate our existing road map,” he said.
“We are dedicated to a disruption-free customer experience—with no plans to re-platform—and the work to separate our technology has already been completed without any impact to our clients, which is a testament to that commitment.”
Jon Bragg is a journalist for Momentum Media's Investor Daily, nestegg and ifa. He enjoys writing about a wide variety of financial topics and issues and exploring the many implications they have on all aspects of life.