Fintel makes two more acquisitions amid strong trading

(Sharecast News) - Financial technology and support specialist Fintel announced two significant strategic acquisitions on Tuesday and an update on its recent trading. The AIM-traded firm said it had completed the acquisition of VouchedFor through its Fintel IQ technology and knowledge platform.

It described VouchedFor as a review site for financial advisers, mortgage advisers, solicitors and accountants, serving over 5,000 intermediary customers.

It said the strategic move would expand its services to the advice market by leveraging its technology and regulatory services platform.

Fintel was planning to accelerate the growth and reach of VouchedFor, offering increased opportunities for customers and enhancing its value to consumers.

The transaction, completed in November, involved a net upfront cash consideration of £7.5m partially funded by the group's £80m revolving credit facility.

Additionally, a contingent earnout capped at £10m was tied to a multiple of recurring revenue generated over the next two years.

VouchedFor also introduced the 'Elevation' product, which monitored consumer duty compliance and was expected to drive future growth.

Secondly, Fintel's subsidiary Defaqto acquired AKG, a provider of independent assessments and ratings of financial strength for various organisations, including life companies, investment platforms and discretionary fund managers.

The board said the acquisition complemented Defaqto's portfolio of ratings and reviews for financial services and investment professionals.

It was completed in November, entirely funded from cash reserves, with a net upfront cash consideration of £1.6m.

An additional earnout of up to £0.4m was contingent on specific trading criteria met in the first three years of ownership.

The board said the acquisitions were Fintel's third and fourth strategic purchases in 2023, following the acquisitions of Competent Adviser and Micap in July.

Fintel said the moves aligned with its overarching strategy to enhance the retail financial services market, promote the value of financial advice, and bolster consumer confidence and trust.

The company said it was confident in its ability to achieve strategic progress, backed by a robust balance sheet and a positive merger and acquisition pipeline.

In addition to the acquisitions, Fintel reported that its core business was performing well, delivering resilient earnings consistent with board and market expectations for 2023.

Despite ongoing challenges in the UK housing market, the company reported continued progress in software licence sales and acquisitions, contributing to its overall stability and growth prospects.

"Our positive trading momentum has continued into the second half, with continued growth in software-as-a-service and subscriptions revenues, supported by our resilient, diversified revenue base," said joint chief executive officer Matt Timmins.

"VouchedFor and AKG are two market-leading businesses which are highly complementary to our offering and share our vision.

"VouchedFor is the UK's standard bearer for Trusted Advice while AKG has been at the forefront of financial strength ratings and consultancy for over 20 years."

Timmins said both had strong adjacencies regarding Fintel's capabilities and customers, with the firm looking to develop their growth prospects further.

"We continue to deliver growth organically and make progress consolidating the fragmented software market, providing efficiencies for advisers and creating better outcomes for all participants.

"With a strong merger and acquisition pipeline, underpinned by our balance sheet and cash position, we are confident in making further strategic progress."

At 1210 GMT, shares in Fintel were down 0.73% at 205p.

Reporting by Josh White for Sharecast.com.