As part of their corporate refresh strategy, financial services support company Centrepoint Alliance (ASX: CAF) has significantly increased its service offering to clients via the acquisition of Enzumo, its clients and recurring revenue.
The acquisition of Enzumo for $1.5m from Chant West Holdings (ASX: CWL) will accelerate Centrepoint’s new financial model whilst enhancing their technology offerings to financial advisors.
“Acquiring Enzumo will accelerate the transformation of our business model to focus on scalable, recurring subscription fee revenue,” said Centrepoint Alliance CEO, Angus Benbow.
“Recurring adviser fees are already Centrepoint’s largest income source, and Enzumo will help us to build further on the 37% growth we delivered in recurring revenue in H1 FY20.
“Enzumo has a high-quality team which has developed a strong pipeline of new opportunities. I look forward to working with Enzumo to execute its growth plans and add new value to the licensees and advisers across our combined network.”
Key rationale behind the acquisition is Enzumo’s specialisation in Xplan – the industry leading software platform in the financial planning and wealth sectors. Since launching in 2004, Enzumo now provides support services to more than 2,200 Xplan users around Australia, including some of Australia’s largest dealer groups with the majority of Enzumo’s revenue being recurring.
The $1.5m purchase, funded entirely from existing cash reserves, represents 4.2x expected FY20 EBITDA with Centrepoint intended to maintain the Enzumo brand as a separate business to Centrepoint’s existing financial advisor support services.
Within its Xplan customisation services, Enzumo assists financial advisors with customised templates for fact finds, statements of advice, annual reviews, business workflows and interactive Xplan education guides.
For the half-year ending 31 December 2019, Centrepoint reported a 37% increase in recurring fee-based revenue to $4.2m – the focus of their corporate refresh – despite overall Group revenue being 12% down at $14.1m.
Shares in Centrepoint responded well to news of the Enzumo acquisition, reaching an intraday high of $0.095, a 18.75% rise on the previous $0.08 close.
Alfred Chan is a Business Reporter at The Sentiment specialising in ASX-listed small cap companies, a bloodstock enthusiast and former equities analyst.
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