Shares in West Perth-based Centrepoint Alliance Ltd have risen over 10 per cent today on the back of news the financial services firm has acquired Victorian-based insurance broker and underwriter OAMPS Ltd's premium funding business.
Shares in West Perth-based Centrepoint Alliance Ltd rose more than 10 per cent today on the back of news the financial services firm has acquired Victorian-based insurance broker and underwriter OAMPS Ltd's premium funding business.
At market close, shares in insurance premiums finance specialist Centrepoint had risen 8 cents to 86 cents.
On Friday, Alliance requested a trading halt, pending the announcement of the acquisition. Today it revealed the scrip-based deal valued at $18.6 million which will leave OAMPS with about 25 per cent of Centrepoint.
The deal follows some recent director disclosures regarding share trades which reveal some large holdings.
On the 4th April, Centrepoint managing director Richard Nelson increased his indirect interest in the company by 557,328 shares under a dividend reinvestment plan for a consideration of $405,178 bring his holding to 16.7 million shares worth more than $14 million.
Another director, Martin Kane, also bought a small parcel to bring his total to 16.1 million shares worth about $13.8 million.
Below is the full release:
Centrepoint Alliance buys OAMPS Premium Funding
Centrepoint Alliance Limited ('CAF') has purchased OAMPS Premium Funding ('OPF'), the premium-funding arm of the OAMPS Ltd Group.
Rick Nelson, Managing Director of Centrepoint Alliance Limited, said the purchase was subject to shareholder approval and to the satisfactory completion of due diligence procedures. The expected completion date is 1st July 2006.
OPF provides insurance premium funding services to the OAMPS insurance broking operations under a sole preferred funder arrangement. That will continue and Centrepoint Alliance aims to grow the business by expanding the range of products and services.
Mr. Nelson told last year's annual general meeting of shareholders that Centrepoint Alliance was on the acquisition trail because of the identified trend of consolidation in the insurance premium funding and finance brokering markets. "We also have a goal of lending more on balance sheet. This acquisition fitted the criteria of both goals perfectly," he said.
Achieving greater scale in premium funding through adding CAF 's expertise to the existing OAMPS premium funding business means that significant improvements are possible in technology, product range and client service, he said. "This is a significant move for Centrepoint Alliance and a positive step for Australia's insurance premium funding market."
Mr. Nelson said CAF is in discussions with other potential acquisition and strategic partnership targets. "We are actively seeking out organisations that can use our balance sheet to help us grow together".
Centrepoint Alliance is also growing organically. "We have a large sales team operating throughout Australia and that's making a big difference in achieving our growth targets".
Over the six months to 31 December 2005, CAF 's earnings per share were 4.2c, and Mr. Nelson predicted the weighted average EPS would finish the financial year around 8c. This acquisition will be earnings per share positive immediately.
Mr. Nelson said turnover was also growing significantly. In 2004-05 prior to the merger with Centrepoint Finance Group, Alliance Finance Corporation handled finance business to the value of $238 million. CAF is projected to reach $1 billion in 2005-06 on behalf of more than 30,000 businesses. This purchase together with organic growth will take the company's writings to $1.25 billion in 2006-07.
The purchase of OAMPS Premium Funding will be achieved by the issue of scrip and will result in OAMPS holding approximately 25% of the equity in CAF, valued at more than $18.6million. The holding will be in a mixture of voting and non-voting shares.
In the half-year to December 31, 2005, Centrepoint Alliance, achieved volume of $278 million in insurance premium funding and $234 million in commercial finance.
Centrepoint Alliance is one of the largest independent ASX -listed finance organisations in Australia and specialises in insurance premium funding, and commercial finance.
OAMPS is Australia's largest locally owned insurance broking and related services company. In 2004-05 it handled turnover in excess of $1 billion, making it one of the top five brokers in Australia.
