• 63 per cent discount to net asset value
• Net cash, deferred consideration and cash dividends exceed market capitalisation
• Shares massively oversold
Aim-traded financial services group Tavistock Investments (TAVI) is transforming itself into a fintech business following the acquisition of a 76.5 per cent stake in Lifetime Financial Management Intermediaries. Tavistock paid an initial consideration of £5.95mn, which included paying down debt. An earnout over a four-year period could increase the total consideration to £9.9mn if Lifetime achieves cash profit targets.
The regulatory burden being imposed on financial advisory firms has increased significantly over the past 10 years, driving up the cost of doing business. As a result, many now find it commercially unsustainable to support lower-value clients and are shedding them, thereby increasing the pool of people without access to financial advice. It is this pool of ‘orphaned’ investors that Tavistock is targeting through its majority ownership of Lifetime. In addition, the group has access to more than 700,000 potential clients via its employee benefits business.