Netwealth rules out Praemium buyout

Netwealth founder Michael Heine, left, with his son and joint managing director Matt Heine. Picture: Stuart McEvoy

If there was any suggestion that Netwealth is still keen to buy Praemium, it was put to bed on Wednesday by Matthew Heine.

Mr Heine, Netwealth’s joint managing director, was speaking on a panel on Wednesday with the boss of rival Hub24, Andrew Alcock, at the Citi Australia and New Zealand Investment Conference about wealth platforms.

Mr Heine, said that the company was unlikely to embark on “transformational” acquisitions, but rather focus on smaller bolt-on deals, although he believed there would be consolidation in the industry.

Netwealth made a $785m scrip proposal to merge with Praemium around November last year but Praemium rejected its offer.

Sources at the time suggested Mr Heine was driving the deal, but his father, founding director Michael, was not so sure about the move, and now son Matthew is of agreement.

Both Netwealth and Praemium have seen their share prices fall substantially this year on the back of a weaker economic outlook.

Despite the share price of Praemium closing on Wednesday at 69c, sources say that Praemium is holding out for a price of $1.50 per share, which Netwealth views to be too steep.

Praemium offers services for institutional and wealthy investors across super and other areas and it counts groups like Morgan Stanley among its customers that use it for tax reporting and vertical equities.

Netwealth is a retail platform that hosts superannuation data, allowing customers to buy and sell shares and manage funds.

Netwealth has been seen as one of the strongest performers in the sector and is keen to move up the vertical stack.

Analysts believe consolidation in the industry makes sense.

Last year’s scrip offer by Netwealth valued Praemium at $1.50 per share when Praemium’s shares were at $1.17, and then Praemium wanted $1.70.

Interestingly, some believe that Iress remains a takeover target, with buyers interested in parts of the business, triggering a potential break-up play.

Ahead of newly appointed chief executive Marcus Price taking the helm, Iress last month downgraded earnings, prompting a plunge in the share price of the $1.7bn company.

Iress consists of three parts – data information, where it competes with Bloomberg, fund administrator OneVue and financial planning software business XPlan.

Groups like Hub24 and Netwealth would likely have an interest in OneVue and XPlan, although sources believe private equity firms would be the more likely buyers.