May raise capital, page-25

"If IFL pay 820m that's a PE of 20 almost double what they paid for Shadforth."


Comparing StatePlus at 20x P/E and Shadforth at 10x P/E is akin to comparing apples with oranges. One valuation multiple is pre-synergies that are to be extracted, and the other is after synergy realisation.

To date, IFL has extracted $30m of synergies out of the Shadforth business. And its not that Shadforth was badly run. It was actually tightly-run. The synergies arose simply from migrating Shadforth customers onto IOOF systems, thereby eliminating redundant platform infrastructure costs and duplicated fixed overheads.

I suspect we'll hear a synergy number of that same order of magnitude in the event that IFL is successful in its bid for the StatePlus business which, I strongly suspect - being owned by a not-for-profit organisation - is a far more clunky, company with greater cost elimination potential than Shadforth offered at the time of its purchase.

That should assist you in doing some meaningful P/E comparison work, instead of just stabbing around in the dark.