Wealth advisory firm AD Capital Group is looking to expand this year, aiming to list on the ASX with an initial $10 million IPO and looking to acquire more advisory practices.
The company says funds raised from the IPO will be used by AD Capital to provide additional funding for company growth and to provide liquidity assurance for incoming investors.
Jonathan Thomas, CEO at AD Capital said the group is hoping to list as soon as possible, with an aim to have a couple of deals complete in the first quarter.
“We’re looking to finish up with a couple of acquisitions so we can go to market with a better proposition,” he said.
AD Capital comprises three business divisions: AD Securities, AD Financial Services/Advisory and AD Research with the Group’s core clients including retail, wholesale and institutional groups within Australian financial services.
The company has around 50 advisers nationwide, and is focused on wealth management, research and consultation.
Last year, AD Financial Services acquired Sydney based independent dealer group Adansonia and national non-bank dealer group, Ballast Financial Services.
Mr Thomas added that AD Capital expects a change in the industry as a result of the royal commission, with banks offloading their financial planning businesses.
“We are actually seeing a lot of enquiries from bank planners to bring their business with their clients and join non-institutionally aligned dealer groups,” he said.
“That’s going to be a major change in the landscape.”
He said AD Capital is looking at potential partnerships with advisory groups who were previously aligned with the major institutions.
“We’re in the early stages for some of these groups and no official announcement’s been made, so I wouldn’t want to put anyone on the spot about who’s doing it,” he said.
“But we do know there’s going to be a large exit and these advisers are going to need firms that are going to help them to transition from bank world, which is very regimented and prescriptive in what the advisers could and couldn’t do, to an environment where they may be running their own advice practice.
“We’re going to have to make sure they understand the transition and be able to make the change, and still be compliant with what they have to do.”
The firm is looking at making acquisitions not only within the capital cities, but across regional areas.
“The enquiries that we get are from people outside the metro areas anyway. For example, we are looking at a firm in Port Augusta in South Australia, we’ve got firms in regional Queensland and NSW,” Mr Thomas said.
“In Victoria we are pretty much metro based and in WA we are very well diversified.”
The advisory segment of the business aims to fill the gap between institutionally owned dealer groups and boutique dealer groups.
“I guess it comes down to size and one of the issues with running a dealer group is the high cost of compliance and the high degree of governance you have to have over your advisers in the group,” Mr Thomas said.
“If you’re a smaller advice group, that starts to become very difficult because it’s very costly to do. The other alternative is to then go to an institutionally aligned dealer group who do have the ability to cover all those costs but then you start to lose the connection with your clients.”
He added AD Capital is hoping to achieve the “best of both worlds”, by having the means to back costs while retaining a personal touch with clients.
“There's a number of these smaller adviser dealer groups that do just well enough or the principals of those dealer groups to continue them on, but they’re not really in a position to enhance the value that they add to their adviser group,” he said.
“They only just make enough money to cover their costs and to maybe give a little bit of money to their shareholders.”
“They’re the target that we have. We think we’ll be able to get to a scale where we can provide exceptional service to those advisers to assist them in growing their business.”
AD Securities Australia is the group’s client-focused advisory and equities dealing firm while the Research division provides investment consulting services, giving customised solutions to institutional investors.
Mr Thomas joined AD Capital last year.
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