Of the $14 million, $2.6 million will come from a placement of approximately eight million ordinary shares through subscriptions from institutional investors.
The remaining $11.4 million will be an underwritten one-for-three non-renounceable rights issue of 35.6 million ordinary shares, according to Centrepoint Alliance.
Speaking to InvestorDaily, Centrepoint Alliance managing director John de Zwart said the $5 million of the capital raising will be used to fund the premium funding business.
“The premium funding business is growing well in excess of 20 per cent, so it is a capital intensive business,” said Mr de Zwart.
The rate of growth in the business has accelerated in recent months, he said – and additional capital is required to maintain those rates.
“Hopefully it will help us to get our interest costs down, with a stronger capital position within the group. It will also enable us to consider inorganic opportunities in that space should they arise,” said Mr de Zwart.
On the wealth management side of the business, Centrepoint Alliance is set to assume a responsible entity role that will involve Australian Financial Services Licence capital requirements of $3 million.
“That will initially be small single-digit but growing to a $5 million capital requirement over the next couple of years,” said Mr de Zwart.
Centrepoint is also investing $1 million into ‘capability funding’ for the wealth management business, he said.
“That’s just building a smarter practice – integrating various systems and solutions in the marketplace just to make the advisers’ life much easier,” said Mr de Zwart.
He added that $4.4 million will go into strengthening the balance sheet of Centrepoint.
The capital raising was underwritten by Wilson HTW and ultimately cost Centrepoint $600,000, said Mr de Zwart.
Centrepoint Alliance is the parent company of financial planning dealer groups Professional Investment Services and Associated Advisory Practices.
