Newly listed wealth manager Evans Dixon has fired up its expansion plans, taking over boutique Sydney investment bank Fort Street Advisers and snapping up a larger stake in Fort Street’s real estate investment funds.
Fort Street Advisers will merge with Evans Dixon’s capital markets business to beef up its corporate and institutional offering in a $53.9 million cash and scrip deal.
The transaction will see Evans Dixon hand over 14.3 million in fully paid ordinary shares and $23.4 million in cash for control of Fort Street and a further 25 per cent stake in two joint venture property funds, in which it already has a 50 per cent share.
Topping up its half share with a further quarter stake in the Fort Street Real Estate Capital and Fort Street Real Estate Services will give Evans Dixon a controlling interest in the funds which manage 12 commercial properties worth about $730 million.
Shares in Evans Dixon were trading at $2.10 on Monday, below a listing price of $2.50.
“The acquisition increases our interest in the Fort Street Real Estate Capital platform which we believe presents significant growth potential for the businesses, especially from institutional specific mandates,” Evans Dixon chief executive Alan Dixon said.
Evans Dixon debuted on the ASX in May this year after a corporate amalgam of David Evans' Evans & Partners and Alan Dixon's Dixon Advisory, posting an inaugural result in August of $50.1 million in underlying earnings and an 11 cent dividend.
Mr Dixon said both firms were “well known” to each other.
“We have worked closely together on various matters since 2013, including the successful Australian commercial property joint venture, Fort Street Real Estate Capital Fund series. The two firms have also worked together on a number of corporate mandates over the years,” he said.
The deal locks Fort Street’s principal players Richard Hunt and Ben Keeble into the new corporate structure. More than half of the transaction was structured in shares that can’t be traded until May 2022.
“The businesses are a very strategic fit and combining them is a natural progression for our business,” Mr Hunt said.
Since 2010, the combined groups had been involved with more than 100 capital markets deals (worth $30 billion) and advised on 70 corporate mandates, he said.
Evans Dixon’s so-called vertically integrated financial advice model has been a focus during the Hayne royal commission into financial and banking services.
The $18 billion fund manager was confident the education standards of its financial advisers were high enough to limit any need for an overhaul.