Chant West Holdings (ASX: CWL) will divest one of its two core businesses – Chant West superannuation research and consultancy – to Zenith Investment Partners for $12 million via an asset sale.
Chant West Holdings chief executive officer Brendan Burwood said the company had fielded a number of enquiries for its superannuation research and consultancy business for some time.
He pointed out that the superannuation business had been a “strong performer” for the company since it was acquired in 2015 – achieved 11% customer revenue growth in the last financial year alone.
“We believe this proposal represents the best option for all stakeholders.”
Once the superannuation arm has been sold (subject to $1.25 million escrow and other requirements), Chant West Holdings plans to review its options regarding returning value to shareholders.
This will include Chant West Holdings retaining its financial planning technology business Enzumo and holding a cash surplus of about $0.10 per ordinary share on issue.
Chant West Holdings said it plans to return the cash surplus to shareholders.
Chant West Holdings remaining business will be Enzumo, which undertakes in-depth analysis of financial planning businesses and creates tailored technology solutions to assist them with operating more efficiently and compliantly.
Enzumo’s services involve configuring and customising XPLAN software to meet a company’s individual needs.
Customisation includes fact find templates, statements of advice, annual reviews and business workflows.
The entity also provides cloud-based e-learning management systems, which are interactive and instructional to help advisers optimise their XPLAN and add-on products.
Recent financial performance
During the December 2019 quarter, Chant West Holdings revealed operating cash flow of $1 million – attributed to a rise in prepayments for subsidiary Chant West’s subscription services during December.
The group’s cash balance at the end of the period was $4.1 million – up from $3.3 million in the previous corresponding period.