Generation Development Group to acquire remaining 61.9% of Lonsec for $197.4 million
SYDNEY, AUSTRALIA: Generation Development Group Limited (ASX:GDG) has entered into a binding agreement to acquire the remaining 61.9%of Lonsec Holdings Pty Ltd’s fully diluted share capital not already owned by GDG for $197.4 million up-front consideration.
Following GDG’s highly successful investment in Lonsec in 2020, a move to 100% ownership provides an opportunity for GDG to take full control of a familiar asset with further expected significant growth upside.
Generation Development Group intends to raise approximately $155.4m through a fully underwritten Institutional Placement and Accelerated Non-Renounceable Entitlement Offer. Proceeds of the Equity Raising will be used to fund the Acquisition plus associated transaction costs. Remaining up-front consideration will be funded through a Conditional Placement to Lonsec shareholders who have elected to receive scrip in GDG in exchange for their equity in Lonsec.
The acquisition of Lonsec is expected to be high single digit to low double-digit EPS accretive in FY25 on a full-year pro forma basis.
Commenting on the transaction, Generation Life Chief Executive Officer Grant Hackett OAM said, “I am excited to announce today that Generation Development Group is embarking on a significant step in progressing its growth strategy through the acquisition of the residual equity interests in Lonsec”.
“We have entered into binding agreement to acquire the remaining 61.9% interest in Lonsec, a market leading qualitative investment and fund research and ratings provider with a very high quality client base. Lonsec is well known and respected in the financial services sector, with its clients comprising a significant proportion of Australia’s leading fund managers, superannuation funds, advisory groups and wealth platforms. This acquisition of Lonsec will provide GDG with full ownership of a highly strategic asset in an attractive segment of the wealth management sector. We believe that Lonsec is well positioned for future growth supported by strong industry and regulatory tailwinds and is expected to provide access to resilient recurring revenue streams from its core research offering. The Lonsec acquisition is expected to be immediately accretive to our earnings.”
“Further, we believe the acquisition will allow GDG to utilise the Lonsec Investment Solutions business as a base to consolidate other managed account businesses and deliver significant growth”.
Founded in 1994, Lonsec has grown to become one of Australia’s pre-eminent providers of investment research, product ratings and managed account solutions.
Lonsec will continue to operate as a standalone entity with management continuing to implement the business plan and financial and operating strategies it had in place prior to the acquisition.
Completion expected in August 2024, subject to customary closing conditions and related GDG shareholder approvals.
K&L Gates is acting as legal adviser to GDG in relation to the acquisition of Lonsec. Baker McKenzie is acting as legal adviser to Lonsec in relation to the sale of Lonsec.
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