Prime Financial Group expands wealth platform with acquisition of Lincoln Indicators

Prime Financial Group (ASX: PFG) will expand its Wealth business and distribution footprint with the acquisition of Australian investment research, portfolio, platform and funds management business Lincoln Indicators, together with associated intellectual property held by a related party.

The transaction will help Prime access Australia’s growing wealth sector, with around 690,000 individuals currently classified as high-net-worth investors—an 8.7% rise from 635,000 in 2023.

These investors collectively manage $3.4 trillion in investable assets, up from $2.98t in the previous year.

High-net-worth market

Prime chair Simon Madder was keen for the company to expand its Wealth offering.

“This transaction provides us with additional tools and services for the high-net-worth and wholesale investor market and complements our existing Wealth business, providing us with significant distribution capabilities, multiple synergies and cross-sell opportunities,” he said.

“The acquisition will provide us with ownership of a leading Australian wealth provider and additional profitability from a suite of well-established and loyal clients.”

Deal consideration

Prime will pay Lincoln an initial consideration of up to $5 million, comprising a $4m tranche at completion and $1m conditional on Lincoln achieving specified cost-saving milestones within 90 days of settlement.

Prime will pay additional tranches of $3.5m at the end of each of the first two years post-completion if Lincoln reaches pre-determined EBITDA targets and up to $4.2m if Lincoln outperforms those targets.

A fourth and final tranche of $3.75m based on EBITDA performance (or up to $4.5m if earnings targets are outperformed) will be paid on the third anniversary of completion.

Cash-scrip mix

Each tranche will comprise a minimum of 70% cash, with the remainder as Prime ordinary shares, subject to an escrow period of 12 months from the date of issue.

Prime will also pay $2.1m over a three-year period for intellectual property owned by the related party.

Prime will fund all cash components of the acquisition from its operating cash flow, debt facilities and cash reserves.

Revenue contribution

Lincoln Indicators has approximately 3,300 high-net-worth investors on its books, with access to over $600m in proprietary managed funds as well as a range of research services.

Prime expects the acquisition to make a small contribution to its FY25 revenue and provide annual recurring revenue of around $11m, along with a positive EBITDA contribution.

Lincoln co-founder and managing director Tim Lincoln will join Prime’s Wealth leadership team following completion of the deal.