Peter Webb, fund manager turned market commentator looks at AFH Financial Group. He was responsible for launching the successful Eaglet Investment Trust. He also headed Unicorn Asset Management and up until recently the Elite Webb Capital Smaller Companies Income & Growth Fund.
Market consolidator today updated shareholders and confirms that strong growth continues since its year end in October. The Company made 16 acquisitions last year spending £34m and helped by fund raisings at 250p per share in December 17 (raised £17.5m) and at 370p per share in October 18 (raised £15m). This degree of support from UK Institutions is testimony to the validity of the investment story. Earnings per share are forecast to grow strongly this year as the benefit of last year's deals and a further 4 in the current year impact earnings.
This is a well run company with a strong business model and plenty of scope for both acquisitions and organic led growth. The UK IFA market remains highly fragmented and the AFH model enables wealth planners to bolt on their businesses to its platform and focus on managing clients rather than supporting administration and regulatory functions that they really do not enjoy.
The Company's shares trade at 346p (market cap. £146m) and are on a historic PER of 17.6x falling to 11.1x for the year ended 31 October. 2019. The Company has circa. £20m in cash to fund further deals and is expected to pay a decent 8.7p per share dividend in the current year. FUM has now grown to a whopping £5Bn.
