Clime retail advice book sale a discount?

The buyer of Clime Investment Management retail client book remains unnamed, but the asset’s $1.65 million sale price is a significant discount on what the business paid the acquisition of MTIS Wealth Management in 2022.

However, Clime managing director, Michael Baragwanath has stipulated to Financial Newswire at the centre of transaction is not MTIS and that “in fact, very few, if any, MTIS clients were part of the devestment”.

He said, “The transaction relates only to a clearly defined subset of retail clients whose age and profile made them more appropriately serviced by another advice business whose service offer better suits that group. The sale price of $1.65 million is entirely reasonable at approximately 2.2x revenue and in line with industry norms given the specific cohort of clients involved”.

In May 2022 Financial Newswire reported that Clime had announced the $7 million acquisition of the operating assets of wealth management, advisory and accounting/tax services firm, MTIS Wealth Management.

At the time, the announcement said the MTIS principals, Pauline Hammer and Anna Garuccio would stay on with the business post-acquisition.

The announcement was regarded as significant in the context of Clime’s then ownership of Madison Financial which was last year sold to Infocus Wealth Management.

Infocus chief executive, Darren Steinhardt yesterday said his firm was not the buyer in the latest transaction.

Clime announced to the Australian Securities Exchange (ASX) that it has entered into a binding term sheet with an external financial planning practice operating under its own AFSL for the sale of the retail client book.

It said the key elements of the transaction include an agreed consideration of $1.65 million with $400,000 cash consideration to be received by Clime within 90 days of completion and $1.25 million redeemable note issued by Clime with an 8% interest paid monthly.

It said three Clime staff will transition to the external AFSL and will contribute towards the premises costs for the staff.

The announcement said settlement is expected to occur on 19 December.

Clime said the divestment of the client book is consistent with the company’s strategy to streamline operation and prioritise its wholesale business.

The Clime statement explained the failure to name the buyer of the business by stating the “the identity of the counterparty is not considered to be information that is expected to have a material effect on the price of the company’s securities and the description of the counterparty provided is sufficient to assess its standing and creditworthiness”.