Sydney-based broker Axi has made a AUD $53m ($34.3m) bid to buy Selfwealth, an Australian stockbroker.
Selfwealth is listed on the Australian Securities Exchange. The company received a AUD $0.22 per share takeover bid from a rival firm called Bell Financial Group on Wednesday.
Axi made its takeover bid of AUD $0.23 per share the following day.
Selfwealth’s most recent annual report shows it made AUD $27.6m in revenue last year, with net profit of AUD $3.4m.
The company has 128,000 clients on its books and close to AUD $11bn in assets under management. This would mean the average account holds around AUD $86,000.
When we spoke to Axi CEO Rajesh Yohannan earlier this year, he noted the company now has a proprietary app and that the end goal was to add other assets, including cash equities and crypto.
The attempt to acquire Selfwealth is probably part of that plan. Firstly, a lot of backend infrastructure for cash equities is cumbersome to build. Selfwealth appears to already have it in place.
The other factor is the client book. If you think about this purely in those terms, with 128,000 clients and a USD purchase price of approximately $34.3m, this would be an average cost per new user of about $266.
However, it’s also worth noting that Selfwealth has AUD $11.4m in cash at the bank. So if you subtract that from the acquisition cost, then the average cost per user comes down to approximately $211.