iFast Corporation has signed an agreement with its partner, Eagles Peak Holding Limited, to acquire UK’s BFC Bank Limited from Bahrain-based BFC Group for some $45.9 million, with an additional injection amount of $27.5 million.
The Group will have an 85% stake in the UK bank.
BFC Bank is a fully licensed UK bank operating under the Financial Services Compensation Scheme, and is authorised by the Prudential Regulation Authority of the United Kingdom (PRA) and Financial Conduct Authority of the United Kingdom (FCA), says iFast in a Jan 7 press release.
The acquisition amount will be £25 million ($45.9 million), comprising an estimated amount of £22.6 million ($41.5 million) to fund the acquisition of BFC Bank and £2.4 million ($4.4 million) to offset relevant transaction costs.
The proposed deal represents a price-to-book multiple of about 1.62 times. “The Group believes this is an attractive level,” says iFast Corp.
There will be an additional injection amount of £15.0 million ($27.5 million) to fund a capital injection into BFC Bank.
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The total investment amount of £40.0 million ($73.4 million) represents 3.2% of the company’s market capitalisation as at Jan 5.
The proposed acquisition is dependent on the PRA’s and the FCA’s approval, and either iFast Corp shareholders' approval or a waiver of shareholders' approval granted by the Singapore Exchange (SGX).
The Group plans to finance the proposed deal using a combination of internal funds, bank borrowings and/or fund raising in the capital markets.
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The proposed acquisition will enable the Group to add a digital bank to its FinTech ecosystem. The Group sees synergy in adding the UK bank’s capabilities into its existing digital wealth management platform, strengthening its vision to become a truly global wealth management business and opening up other opportunities in the future.
BFC Bank reported a net loss of £2.2 million ($4.0 million) for 9M2021.
Based on a net loss of approximately £1.9 million ($3.4 million), which is based on an 85% stake in BFC Bank for 9M2021, and the Group’s net profit of approximately $27.8 million for 9M2021, the net loss attributable to the assets acquired is approximately 12.4% of the Group’s net profit.
iFast Corp expects the proposed acquisition to contribute some initial start-up losses in 2022 and 2023. However, as a Group, iFast Corp expects to see a robust growth in the Group’s profitability between 2021 and 2025, helped also by contributions from its ePension division in Hong Kong, says the company.
“Wealth management platforms with seamless links to good digital banking services that allow consumers and investors to manage payment flows seamlessly across borders while getting attractive deposit rates in various currencies will have strong advantages," says Lim Chung Chun, chairman and CEO of iFast Corp. "With that in mind, the Group believes that one of the central components of the iFast ecosystem going forward will be a digital bank located in a trusted jurisdiction."
iFast had called for a trading halt before markets opened on Jan 7.
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On Nov 19, iFast announced that its wealth advisory operations in Malaysia had surpassed the RM1 billion mark in assets under administration (AUA), representing 113% y-o-y growth.
Launched in 2018, iFast Global Markets (iGM) Malaysia is the wealth advisory arm of iFast Capital Sdn Bhd (iFast Malaysia), the Malaysia subsidiary of iFast Corporation.
iFast Corp is a wealth management FinTech platform, with total AUA of $18.38 billion as at Sept 30, 2021.
Shares in iFast closed at $8.17 on Jan 6.
Photo: Albert Chua / The Edge Singapore
