The HUB24 Ltd (ASX: HUB) share price has returned from its trading halt and is defying the market selloff on Thursday.
At the time of writing, the investment platform provider’s shares are up 4% to $21.79.
Why was the HUB24 share price in a trading halt?
HUB24 requested a trading halt on Wednesday whilst it launched a $60 million equity raising to fund three strategic transactions.
These transactions comprise the acquisition of investment platform provider Xplore Wealth Ltd (ASX: XPL), the acquisition of Ord Minnett’s non-custody Portfolio Administration and Reporting Service (PARS), and an increased investment in integrated accounting and wealth solutions provider Easton Investments Ltd (ASX: EAS).
Management believes these transactions will strengthen its position as the leading provider of integrated platforms, data, and technology services for financial advisers, stockbrokers, private banks, licensees, accountants and their clients.
This morning the company took a step closer to completing these deals after announcing the successful completion of the institutional component of its equity raising.
According to the release, HUB24 has raised $50 million via a fully underwritten placement of 2.5 million new shares to institutional and sophisticated investors at a price of $20 per new share. This represents a 4.6% discount to its last close price.
Management advised that the placement attracted strong demand from existing HUB24 shareholders, as well as new investors.
What now?
HUB24 will now push ahead with its share purchase plan, which is aiming to raise a further $10 million from retail investors.
Eligible HUB24 shareholders will have the opportunity to apply for up to $30,000 worth of new shares. This is free of any brokerage, commission, or transaction costs, and at the same price as the institutional placement.
Why is HUB24 making these transactions?
Management notes that the transactions will increase the funds under administration (FUA) across the combined company to $42 billion ($28 billion in custody and $14 billion in non-custody).
It will also introduce additional capability to HUB24’s market leading platform and allow the company to benefit from the addition of new relationships. This includes two significant new clients who have indicated that these strategic transactions represent a positive outcome for their advisers and their clients.
In respect to earnings, HUB24 expects the transactions to deliver approximately 13% earnings per share accretion in FY 2022.
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James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Hub24 Ltd. The Motley Fool Australia has recommended Hub24 Ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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