- Fintel spent £13.5m on takeovers in 2023 and plans more deals this year
Fintel co-CEO Matt Timmins
Fintel is on the hunt for takeover opportunities in the mortgage and general insurance market in 2024, after the AIM-All Share firm made six acquisitions in just over a year.
The British fintech minnow, which supplies tech and support to financial advisers and wealth managers, has embraced acquisitions as a key part of its growth strategy, helping its shares to add around 50 per cent over the last year.
Fintel spent £13.5million on takeovers in its 2023 financial year, delivering combined core revenues of £1.5million for the period, before buying Synaptic Software for £3.5million and Owen James Events for an undisclosed fee shortly after.
The firm also spent around £4.5million during the year on organic investment, which combined with its heavy M&A spending helped result in a 13.5 per cent slump in statutory earnings before nasties to £14.4million.
But co-chief executive Matt Timmins told This is Money Fintel is ‘maintaining an active pipeline of M&A opportunities’, with the group targeting businesses and sectors offering scale.
He added: ‘[We are looking at] businesses that provide support services to financial intermediaries that are bringing a specific technology or solution.
‘We’re particularly looking here at the mortgage market and the general insurance market, as well as businesses that bring with them data and intellectual property.
‘We’ve got an active pipeline with a mixture of deals. There are a number that are around the same kind of size and scale we made in 2023 plus some large-scale opportunities as well.’
Fintel co-CEO Neil Stevens
Having listed on London’s junior market in 2018, the group’s market cap has grown to around £286million and Fintel shares are by around 70 per cent in that time.
Its key brands are regulatory support business SimplyBiz and Defaqto, which sells tech and data to advisers and wealth managers.
Timmins has previously voiced frustrations with the experience of growing a London-listed business, which can entail undervaluation, poor share price performance and weak liquidity.
Fintel performed in line with market expectations last year with core revenue up 0.3 per cent to £56.6million and adjusted earnings up 5.6 per cent to £20.5million.
It enabled the group to announce full-year dividend of 3.45p, up 6 per cent year-on-year and ahead of forecasts.
Analysts at Investec upgraded Fintel’s target price by 18 per cent to 320p in the wake of the results.
Investec said: ‘The strategic and financial achievements in FY23 provides us with confidence in the group’s ability to deliver on its ambitions, providing digital and data enabled solutions within the retail financial services market.’
Timmins described Fintel’s 2023 performance as ‘resilient… given the state of the mortgage market’ last year as transactions slumped in the wake of weaker mortgage availability and affordability.
But co-CEO Neil Stevens said the mortgage market looks set to turn into a tailwind this year as interest rates fall and many Britons are forced to remortgage.
He said: ‘This year, 1.6 million fixed term mortgage deals come to an end – that’s 1.6 million households who have got to make a decision.
‘Around 80 per cent of all mortgages now go through independent professional brokers. Irrespective of the [home] purchase market, there is a massive requirement for people to take professional advice.
‘Rates are going to be more favourable and the product market is competitive – those are the fundamentals that will drive a strong mortgage market.
‘So we need to get better technology, better data, better systems to help advisers search the market, work out affordability and eligibility criteria for lending, and smooth that process out.’
Fintel shares have started to deliver momentum over the last year
