US private equity firm Flexpoint Ford LLC has agreed a £224.5m cash takeover of Financial Planning group AFH.

The deal, announced on the Stock Exchange today, will see Flexpoint Ford pay 463p in cash for each AFH share.

West Midlands-based AFH, one of the UK's largest Financial Planning firms, has grown rapidly through acquisition of Financial Planning and IFA firms in recent years but last year slowed down its acquisition programme to focus on bedding in new acquisitions.

AFH says the new ownership will help spur future expansion and overcome capital-raising challenges.

AFH has acquired 50 Financial Planning and IFA firms in the past six years.

Flexpoint, which has offices in Chicago, New York, and has set up a UK takeover company, Cortina Bidco, to see through the deal.

The acquisition, subject to shareholder and regulatory approval, values AFH's ordinary share capital at approximately £224.5 million.

In a statement today AFH said: “Whilst the independent directors remain confident in AFH's prospects, they believe that partnering with Flexpoint, a leading US private equity firm with significant financial resources, will assure the successful delivery of the growth strategy and unlock the full potential of the group over the long-term.

“Over the last few years, AFH's ability to access both equity capital and debt funding for growth on reasonable terms in a timely manner has faced challenges on the public markets, which has slowed AFH's growth meaningfully relative to those privately-owned competitors which have been able to scale their businesses, both organically and through M&A, at a faster pace.”

AFH chairman John Wheatley said: "We are pleased to announce this recommended acquisition by Flexpoint and Bidco. Since its IPO in 2014, the AFH management team has been focused on delivering shareholder value through a focus on organic growth and value accretive acquisitions, completing over 50 acquisitions and growing to over £6 billion of funds under management.

"The independent directors believe that the terms of the acquisition are compelling, acknowledge the quality and strong prospects of AFH's business and deliver attractive value to AFH Shareholders in cash, allowing them to crystallise the value of their holdings.”

The current AFH executive team is expected to continue working in the business.

Current CEO and Chartered Financial Planner Alan Hudson has agreed to reinvest £8,773,542 of his stake in the business in Cortina Bidco, a 30% reinvestment of his gross proceeds. Other AFH directors will also reinvest 30% of their proceeds.

Flexpoint said it was buying AFH because it sees the UK wealth management sector as a "potentially attractive area for investment" and it viewed AFH is one of the UK's leading wealth managers. It added that the AFH management team of AFH had built an "attractive Financial Planning-led business with a strong, scaled platform delivering attractive propositions for clients."

The US firm plans to support AFH's management to expand the business organically and by acquisition by providing capital, investment, strategic support and global expertise.

The deal will see AFH become a private company because Flexpoint believes this approach will mean initiatives to boost the performance of the business can be implemented free from the requirement to meet equity markets' "shorter-term reporting requirements and expectations."

AFH Group was founded in 1990 by CEO Alan Hudson and provides wealth management and financial advisory services to over 20,000 clients in the UK.  It employs more than 450 professional advisers and 400 support staff.

In September 2019, following feedback from shareholders, the AFH Group announced a focus on organic growth. With capital raising tougher on the markets, the company adopted a revised strategy of spending more time on the integration of previous acquisitions, improving adviser productivity and generating cash to pay deferred earn-outs and finance additional acquisitions without recourse to the equity market. The group also accelerated its use of digital engagement with clients and use of technology to improve efficiency.