Sequoia confirms $3.1m initial payments from Morrison Securities deal
In selling 80% of its equities clearing business, Morrison Securities, to New Quantum, Sequoia’s cash at bank on settlement was expected to exceed $45 million this year.
It confirmed receival of cleared funds of $1.65 million on 20 March, following an initial deposit of $1.5 million on 9 March when the deal was formally signed.
Sequoia had acquired Morrison Securities in September 2017, offering third-party stockbroking execution solutions to AFSL holders such as financial planners, financial advisers, banks, building societies and trading educators.
However, it announced a deal earlier this month to divest 80% to digital wealth management platform New Quantum.
By 31 May, it was expected to receive $15 million, at which time it would transfer 50.1% of the shares of Morrison to New Quantum.
“On successful completion of this transaction, Sequoia will hold 20% of the shares on issue in Morrison, which will have an independent balance sheet with $105 million of cash at the date of the transfer of shares,” Sequoia stated in a statement to the ASX.
“Post this 80% divestment in the clearing business, Morrison financial results will not form a part reportable consolidated revenue and earnings.
“FY24 forecast for Sequoia consolidated revenue will reduce by approximately $30 million per annum attributable to Morrison to $100 million per annum without taking into account any additional acquisitions or divestments made prior to end of that financial year.”
However, if the purchase price balance of $15 million was not received by the end of August, Sequoia would have received $25 million in deposits and stage 1 completion payments, and would hold a call option to buy back the shares in Morrison for an exercise price of $17.85 million.
Further announcements were expected before 30 June 2023.
In its results announcement to the ASX for the six months to 31 December 2022, Sequoia reported a 22.7% decline in total revenue to $61.1 million.
Normalised EBITDA, or operating profit, had been down 42.5% to $3.2 million while the firm’s statutory net profit after tax dropped by 75.9% to $630,510.
It had been termed a “disappointing result” compared to 1HFY22, when total revenue had been $79 million and normalised EBITDA was $5.5 million.
AUTHOR
Rhea Nath
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