HUB24 transaction signals ongoing industry consolidation

Five financial services acquisitions undertaken or initiated in the past 18 months are just a precursor to further consolidation in the industry driven, in part, by technology as well as the exodus of financial advisers.

The latest acquisition was announced this week with HUB24 moving to acquire Class Super, but it needs to be seen against the background of the Iress acquisition of OneVue, and HUB24’s earlier and more complex acquisition of Xplore Wealth.

Between them, and from slightly different perspectives, Iress and HUB24 are using strategic acquisitions to build vehicles which deliver them greater direct access to financial advice licensees as well as advisers and accountants.

What also needs to be remembered is that Class Super had, in its own right, undertaken its own series of acquisitions picking up NowInfinity, Smartcorp, ReckonDocs, and TopDocs as it moved beyond its origins in self-managed superannuation funds (SMSF) administration and further into compliance and documentation.

At the same time, the Iress acquisition of OneVue, moved it beyond its core business of financial planning software and into the investment platform market and unit registry business giving it more of an end to end relationship with financial advisers.

Then, too, there was Praemium’s acquisition of Powerwrap.

Class Super grew out of the Count Financial business founded by industry veteran, Barry Lambert, and there was a time when the publicly-listed CountPlus held a substantial shareholding in Class.

That shareholding may have been sold down some time ago, but Countplus chief executive, Matthew Rowe, said he could well understand the dynamics which had driven the HUB24/Class transaction.

What is more, he said he believed that it represented yet another sign-post to the consolidation which would continue in the industry.

“I can see it as one of the first among many more transactions – the market is compressing and further consolidation is inevitable,” Rowe said.

The rationale for the HUB24 acquisition of ClassSuper was explained to investors on the basis that it materially accelerated HUB24’s platform of the future strategy while delivering opportunities for growth by delivering increased efficiency and product capability for existing and new customers.

What the HUB24 documentation might also have more explicitly said is that it would extend the company’s reach into the accounting industry via Class Super’s long-standing relationships delivering SMSF administration services and, more recently, compliance documentation.

This was something recognised by AviceIQ general manager, Paul Harding-Davis who said that he could see a conversation being opened up with accounting firms.

“The transaction seems to deliver them compatibilities that are very adjacent and very sensible,” he said.