HUB24 (ASX:HUB) has executed an agreement to acquire the...

HUB24 (ASX:HUB) has executed an agreement to acquire the independently owned financial planning licensee Paragem.

Paragem is a boutique dealer group that has grown to license 20 financial advisory practices across Australia, which advise on more than $2.5 billion of client funds. 

HUB24 and Paragem are complementary with minimal overlap and share a common goal to create financial advice practices and a platform group not aligned to product manufacturers. 

Completion is planned to occur over the next few weeks subject to satisfaction of conditions precedent, including that acquisition arrangements are agreed between Paragem advisers and HUB24 to the satisfaction of the parties.

Consideration is $1 million cash, with deferred payment of another $1 million cash up to 12 months after completion.

Capped earnout consideration of up to an additional $6 million is also payable, subject to financial performance measured over 3 years and paid in HUB24 ordinary shares no later than 30 September 2017.

Paragem has been self funding and cashflow positive over the past two financial years, and gross revenues were $20.2 million in FY14.
       
Both HUB24 and Paragem will retain their existing brands and will continue to operate independently.
 
HUB24 will maintain its focus on supporting the growth of its existing licensee clients, and Paragem will continue its open architecture approach.

HUB24’s platform will enable Paragem advisers to act in the best interests of their clients, free of product issuer conflict.

Both Paragem and HUB24 understand the importance of existing relationships and the acquisition is not expected to alter these in any way.

HUB24 Funds Under Administration increased 122% to $853.8 million in the year to 30 June 2014.