myprosperity acquisition
ACQUISTION
Need To Know
- Scrip based $40m acquisition of myprosperity, a client portal connecting clients and advisers
- Strategic acquisition to remove friction for clients and advisers
- EPS dilutive short term, neutral in FY26, accretive from FY27
A strategically important acquisition that will accelerate HUB's ability to provide a single front-end view of a client’s assets. This will integrate across HUB24, Class, NowInfinity and HUBconnect.
myprosperity is an all-in-one portal with extensive links/integration into market data feeds along with analytical and client management tools, including the onboarding of clients (a key area of friction for both platform clients and advisers)
HUB has been building organically and via recent acquisitions, including Class, the ‘platform of the future’. We view the myprosperity transaction as further enhancing this ambition.
Financially, the transaction is mildly dilutive in the short term, although we are looking at small numbers. myprosperity currently generates $4m of revenue, but the transaction is expected to be a A$1-1.5m drag on EBITDA through FY24, breakeven in FY25 and contribute A$3-5m in FY26.
We see the transaction as a strategic play not an earnings play for HUB. We continue to believe HUB is strategically outplaying its larger rival Netwealth Group (NWL) following recent acquisitions and platform enhancements.
Investment View
The myprosperity acquisition is relatively minor at $40m vs HUB’s market cap of $2.2bn. Strategically the rationale for purchasing the myprosperity makes sense. We continue to like the building blocks HUB is putting in place to maximise its chance of winning more share in the market of the platform.
The weaker performance in net inflows into the platform over CYTD is a result of a cyclical trend across the industry, not structural in our view.
The expected addition of ~$4bn of Equity Trustees FUA over the next 12-18 months reinforces our view that HUB’s value proposition and competitive advantage, as well as its ability to offer a range of solutions for advisers, will drive growth in FUA-based revenue and 'Platform-as-a-Service' revenue streams. We rate HUB a Buy.
Figure 1: myprosperity will help provide a single client experience and remove friction for both end clients and financial advisers
Stock Overview
Share Price
Company Overview
HUB24 is an Australia-based provider of integrated platform, technology, and data solutions. The Company provides technology and data services through HUBconnect Pty Ltd (HUBconnect) and Agility Applications Pty Ltd (Agility).
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