Sequoia Financial Group has announced that it has entered into a binding agreement to divest 80 per cent of its equity interest in Morrison Securities to New Quantum Holdings.
In a statement released to the ASX on Thursday, Sequoia confirmed that it is set to receive a total cash consideration of $40.5 million as part of the transaction.
“The SEQ board believed the opportunity for Morrison to expand its service offering was restricted by the SEQ balance sheet,” it said.
“This transaction will allow SEQ to retain a minority but viable interest in Morrison and provide the business with the capacity to capitalise on opportunities that both SEQ and NQ have recognised as important for the future growth of Morrison.”
The move comes after Sequoia reported a “disappointing result” in the first half, with a 22.7 per cent decline in total revenue and a 42.5 per cent drop in normalised EBITDA.
In its announcement, Sequoia noted that it had received several expressions of interest for acquiring part or all of Morrison in recent times, but chose to select New Quantum because of its “flexible approach” to the transaction and its desire for Sequoia to maintain an active role in the development and growth of the equities clearing business.
“This growth will be guided by our experienced and professional executive team at Morrison who will continue to manage the business alongside NQ who are committed to investing in technological solutions that will improve the service offering to the very loyal customer base of Morrison,” Sequoia said.
Sequoia said that the divestment, which will be completed in August, will have no impact on its FY 2023 result, but the firm flagged that its current consolidated group revenue will be reduced by approximately 20 per cent in FY 2024.
Completion of the transaction remains subject to customary conditions including the parties executing formal share sale and shareholder agreements.
