Praemium, one of Stock Specialist’s most recent additions to our portfolio surged on Wednesday, hitting an intra-day multiyear high after the investment platform provider delivered two key announcements - including an update on the potential divestment of its international business along with a Jun quarterly update.
International business divestment
Praemium finalised a strategic review of its international operations which recommended the divestment of the business through a formal sale process. The proposed plan will allow Praemium to focus its resources on further accelerating its growth trajectory in the Australian platform market.
The strategic review highlighted the technological leadership of the international platform operations and the strong sales and revenue momentum that the business is currently enjoying. However, in a marketplace undergoing significant structural change and consolidation, the business remains at a scale disadvantage to its key competitors.
As a result, the Praemium board said it believes divesting will simplify the group, better serving the interests of clients and opportunities for employees.
Praemium confirmed it has received unsolicited, strong interest from potential buyers. However, there is no certainty around whether the sale process will result in a binding transaction.
June 2021 quarterly update
Praemium reported record results for the June 2021 quarter, with record quarterly inflows of $1.2 billion, record total funds under administration of $41.7 billion; and record FUA for both the Australian and International investment platforms.
FUA of $41.7 billion was the result of record levels in all global segments in the 2021 financial year:
> Australia's platform FUA of $18.4 billion
- up 223% in the 2021 financial year on reported FUA
- up 30% for the consolidated Praemium and Powerwrap
> International platform FUA of $5.0 billion, was up 55%
> While FUA for VMAAS of $18.3 billion, was up 61%
The record platform inflows of $1.2 billion were also due to records across both Australia and International platforms, with net inflows of $820 million for the Australian platform, a 201% increase compared to the reported June 2020 quarter and a 166% increase for the consolidated Praemium and Powerwrap; and net inflows of $389 million for the International platform, a 109% increase compared to the June 2020 quarter.
Praemium Interim CEO Anthony Wamsteker made the following comments on the completion of the year, “The 2021 financial year was a year of transition for Praemium. The acquisition of Powerwrap was a significant milestone, and the post-merger integration initiatives are enhancing our service and functionality for clients. The merged group is one of Australia’s largest independent specialist platform providers and when VMA portfolios are included, there is now over $170 billion in funds administered on our technology. Praemium has a solid pipeline of opportunities to support future growth.”