Chris Locke

MA Financial Group (ASX: MAF), a global alternative asset manager, has announced the acquisition of IP Generation (IPG), a specialist real estate investment management firm based in Melbourne for a fixed consideration of $90.4 million predominately in MAF shares. The business will be integrated into MA Financial’s real estate Asset Management platform, growing its real estate assets under management (AUM) to ~$8 billion and overall AUM to over $12 billion.

Established in 2018, IPG manages ~$2 billion of retail shopping centre assets across 10 funds that own 14 shopping centres located in New South Wales, Queensland, Victoria and Western Australia on behalf of high net wealth investors.

Julian Biggins, Joint CEO of MA Financial, said: “IP Generation has an impressive track-record in securing assets, raising capital and delivering strong returns to its investors. Its complementary, high growth real estate funds management platform will give our (MA Financial) real estate Asset Management business immediate additional scale, expanded and diversified distribution channels and an increased Melbourne presence and investor base.”

IPG’s 29 real estate investment professionals will join MA Financial’s real estate Asset Management business creating a broad real estate funds management platform managing ~$8 billion in core, alternative and real estate credit assets.

Following completion of the acquisition IPG’s Founder and CEO Chris Lock will assume the role of Head of Core Real Estate at MA Financial and be responsible for the performance of the Core Real Estate business and its funds, and will be supported by long-time IPG COO Ingrid van Dijken. IPG Chairman David Blight and Director Greg Miles will join MA Financial’s real estate Asset Management team in leadership roles.

The $90.4 million purchase price represents a multiple of 7.9x FY24 normalised EBITDA. The acquisition consideration includes an $80.0 million upfront component payable 100% in MAF shares which will be issued subject to vesting conditions, and $10.4 million in deferred consideration payable 50% in cash and 50% in MAF shares in 12 months’ time. The combination of IPG and MA Financial delivers significant synergies and scale benefits and is expected to be accretive to MA Financial’s FY25 underlying earnings per share on a full year pro forma basis.

Julian Biggins, Joint CEO of MA Financial, said: “This important strategic and complementary acquisition builds scale in our core real estate business at an attractive once in a cycle opportunity in the real estate market. We have a long association with IP Generation and its senior leaders, and strong cultural alignment sharing a founder philosophy, entrepreneurial mindset and investor-led approach. The integration of our teams will deliver significant synergies and scale benefits, deepening our real estate platform to ~250 professionals offering a breadth of expertise across origination, investment management, development and property management capabilities.

“This acquisition will mutually benefit our many investor clients, which aligns with our philosophy of achieving win-win outcomes for clients, shareholders, and staff.”

Chris Lock, Founder and CEO of IPG, said: “IP Generation and MA Financial have a strong cultural fit and alignment. We have known the MA Financial team for many years and believe the scale of the combined business enables us to deliver even better opportunities and investment returns to all our clients in the future.”

Mr Biggins concluded, “The transaction presents an opportunity to combine IP Generation’s track record and investor base with MA Financial’s balance sheet and capital-raising capabilities to fast-track growth. Additionally, there is potential for earnings enhancement and platform synergies to be realised on the operating side, including within MA Financial’s shopping centre management business, RetPro.”

Following completion of the transaction, the combined group will have a real estate Asset Management platform with significant scale, breadth, and capability:

• ~$8 billion AUM across core real estate, alternative real estate, and real estate credit
• A fully integrated shopping centre manager actively managing ~40 assets
• A large and diverse investor base across wholesale high net worth, retail and institutional investors
• ~250 executives across real estate investment management, asset management and owned operating platforms
• Deep operating capabilities across shopping centres, hospitality, hotels and marinas.

The transaction is expected to complete in early 2H 2025.

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Mr O’Hea has over 20 years’ experience within accommodation hotel investment and corporate finance, and joins MA Financial from Toga Group, where he was the Group’s Chief Investment Officer for the last 10 years.

He has held various senior roles in Australia and Europe which spanned development, funds management and investment. During his time with Toga Group, Mr O’Hea was also a Non-Executive Director and Investment Committee member of TFE Hotels, Toga Group’s hotel operating, development and investment joint venture with Singapore’s Far East Orchard Ltd, a venture which he was instrumental in establishing.

At MA Financial, Mr O’Hea will focus on sourcing accommodation assets for purchase as MA Financial seeks to grow its exposure to the asset class to more than $1 billion.

Commenting on the appointment MA Financial’s Joint CEO, Julian Biggins, said, “We’re thrilled Anthony has joined our Real Estate team. His knowledge and experience will allow us to quickly capitalise on opportunities as they emerge.”

“Hotels are becoming increasingly attractive investments as pricing re-rates due to an uncertain trading outlook. In some cases, the current asset pricing represents significant discounts to replacement values,” said Mr Biggins.

Mr O’Hea said he was excited about the opportunity at MA Financial.  “I’ve had a long association with the hotel investment class and am a firm believer that, when done right, it offers the potential for compelling risk-adjusted returns.”

“A key part of the equation is entry price, and we’re excited about the opportunities emerging in a market where assets are becoming cheaper but where, more than ever, effectively underwriting an investment requires a deep understanding of the sector; we think we’re well placed to do this,” said Mr O’Hea.

MA Financial is largely focused on the specialised management of alternative assets and already has significant investments and operational capability in hospitality, marinas and other alternative real estate assets.

“As business builders, investing in new strategies is important as we look for the next value creation opportunity that will significantly benefit our investors,” Mr Biggins concluded.

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[1] As at 24 August 2023

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Chris Wyke

MA Financial’s Asset Management business underpinned its first half results, delivering 79% of the Group’s EBITDA (before corporate costs) off the back of record first half gross fund inflows of $953 million, up 66% on 1H22.

The diversified financial services group’s overall first half result highlighted strong growth in its recurring revenue streams, the record first half fund inflows, ongoing growth in Finsure and accelerating loan volume growth for MA Money.  The challenging macro environment led to lower transactional activity impacting performance fees and corporate advisory revenue.

Investor interest in the Group’s Private Credit funds and a strong initial raising for the MA Marina Fund were behind the acceleration in Asset Management inflows. AUM climbed to $8.9 billion at 30 June 2023.​

Business highlights

• Record first half funds inflows
• Expansion and success of the private credit business – MA Financial’s credit funds are among Australia’s fastest growing
• Ongoing growth in Finsure and accelerating loan volume growth for MA Money

Financial results

• Underlying revenue, down 13% on 1H22 to $127 million
• Underlying earnings per share (EPS) down 13.6% on 1H22 to 15.2 cents (Statutory EPS down 19% to 10.5 cents)
• Fully franked interim dividend of 6 cents per share declared, in line with 1H22

Outlook

The underlying momentum in the business positions MA Financial for strong future growth.

Joint CEOs Julian Biggins and Chris Wyke said: “We are very pleased with the underlying momentum in the business which positions MA Financial for strong future growth. The composition of our earnings improved significantly with growth in recurring revenue and expense management largely offsetting the decline in performance fees.

“Despite the challenging economic backdrop, we continue to see the benefits of our diversified business model, and our intentional strategy to build a business that can deliver for investors through the economic cycle.

The expansion and success of our Private Credit business is very pleasing. MA Financial’s credit funds are among Australia’s fastest growing. Advisors and investors continue to value our expertise in originating and managing credit assets, highlighted by the 74% growth in the Assets under Management of our Private Credit Funds over the last 12 months. We believe Private Credit investing will continue to benefit from demographic and structural growth drivers for many years.”

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