Prime Financial Group (Prime) plans to acquire equity interests in a number of financial service businesses, with the group confirming it is in talks with up to 20 firms.
Prime managing director and chief executive Simon Madder said Prime is in active discussions with between 15 and 20 groups.
Madder would not disclose the names of any of the groups.
“I cannot at this point name the groups, however Prime are in active discussions with 15 to 20 businesses all at different stages,” he said.
Madder said the listed financial services group will purchase up to a 50 per cent equity stake in and typically seeks an investment of not less than 20 per cent.
The majority of Prime’s investments are between 40 and 50 per cent, he said.
“Our preferred structure is that if we cannot start at 50 per cent we have a mechanism such as an option to acquire further equity at a later date.
“An example of this is the Pacifica transaction which starts at a 35 per cent equity interest with an option to go to 50 per cent.”
Madder said Prime is specifically looking at financial planning, superannuation businesses and accounting firms.
“When making an investment in an accounting firm, Prime also makes a 50 per cent investment in their existing financial planning business, superannuation business or alternatively establishes a financial planning business for the firm under the Prime 50/50 equity model,” he said.
From an acquisition perspective Prime is 75 per cent focused on financial planning and financial services and 25 per cent on accounting firms, he said.
“This split is reflected in our 2007 financial results where of the 76 per cent of our earnings that is generated from financial advice (financial planning and accounting), 85 per cent of that comes from financial planning and 15 per cent from accounting.”
According to the group’s results released yesterday, Prime increased its net profit after tax by 169 per cent from the previous financial year up to $5.1 million from $1.9 million.
In July, Prime completed a 35 per cent investment in Queensland-based accounting and advisory firm Pacifica Chartered Accountants.
Prime currently has 43 financial services and advisory businesses.
