The SimplyBiz Group has conditionally agreed to acquire the entire issued share capital of Regulus Topco Limited for a total consideration of £74.3m.
Regulus is the owner of financial services technology business Defaqto, which operates a fintech platform for 8,500 advisers.
The combination of SimplyBiz and Defaqto will create a fintech and support services group with an increased number and range of distribution channels.
The acquisition will help SimplyBiz to advance its services into the general insurance and banking markets and offer Defaqto access to its knowledge of the advisory and asset management markets.
SimplyBiz will also purchase the £3.4m of cash on Defaqto’s balance sheet upon completion.
Neil Stevens and Matt Timmins (pictured above), joint CEOs at the SimplyBiz Group, said: “The combination of the largest provider of outsourced regulatory and business support to the retail financial services market, with one of the leading providers of financial information and technology, will create a market-leading platform across retail financial services.”
The group plans to finance the acquisition via a conditional placing of new ordinary shares to raise £13.8m with institutional and other investors (the primary placing).
In addition, SimplyBiz will issue new ordinary shares to the value of £15.3m (the vendor placing) and new ordinary shares to the value of £7.5m (the consideration shares).
Finally, it will borrow approximately £37.5m from new bank facilities and use around £3.1m from its current cash resources.
Defaqto’s management has agreed to receive 50% of its vendor equity consideration in SimplyBiz shares, subject to a 12-month hard lock in.
Neil and Matt added: “Having long respected the Defaqto management team, we also recognise not just the strong strategic fit of the business, but also its cultural alignment.
“Defaqto is a business built upon industry-leading talent and we look forward to working with our new colleagues as we continue to enhance services to financial intermediaries and product providers and deliver value for shareholders.”
Specialist broker Peel Hunt has been appointed joint broker on the deal.
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