Stake lobs bid for rival Selfwealth at 17.5¢ per share
Australia’s crowded online retail trading market is set for a shakeup.
Street Talk understands fintech upstart Stake, which is chaired by ex-Perpetual chief executive Geoff Lloyd, has tabled a non-binding takeover offer to acquire ASX-listed rival Selfwealth at 17.5¢.
The offer represents a 25 per cent premium to Selfwealth’s last close price of 14¢ per share and a 27 per cent discount to its 52-week high of 24¢. Grant Samuel and Allens are on hand to advise Stake.
Stake co-founders Dan Silver (left) and Matt Leibowitz.
The bid comes with Selfwealth’s stock price under considerable pressure, sinking near 40 per cent over the past year. Its latest result shows trading revenues have fallen 39 per cent to $8.4 million as the heady highs of pandemic trading fall off.
While it delivered a maiden profit in financial year 2023, profitability is being driven by interest income on client cash balances which have been declining alongside rising interest rates as customers seek higher cash returns.
The $35.3 million market cap broker is without a permanent chief executive after Cath Whitaker’s sudden exit in July. Its board has also rotated following the exits of Rob Edgley, Huy Truong, Jodie Leonard, John O’Shaughnessy and Tam Vu.
Stake was co-founded in 2017 by former Optiver trader Matt Leibowitz and Dan Silver to give retail investors low-cost access to US equities, pioneering the model of charging no fees on US sharemarket trades in Australia. It’s since grown to be Australia’s third-largest online broker with a suite of products including US and ASX share trading and an SMSF platform.
SelfWealth boss Cath Whitaker vacated the top job suddenly in July. AFR
The broker has the backing of Tiger Global and DST Global Partners having secured $90 million in Series A funding in April 2022. It last reported $2.8 billion of assets under management and $20 million revenue a year, most of which comes from the foreign exchange fee it charges when traders swap Australian dollars for US dollars to buy and sell international shares.
Australia’s online brokerage industry saw a wave of new sign-ups as board-locked-down customers turned to stock trading. This activity propelled a new class of online broker which came up in the late 2010s with names like Superhero, Sharesies, eToro and CMC fighting for the spotlight.
However, retail investment platforms such as Commsec, Charles Schwab, SelfWealth and US-based Robinhood have all reported slowing retail investor trading volumes.
Stake’s move represents a major M&A play in an industry ripe for consolidation. For discount brokers, survival is all about scale and finding operating efficiencies to maximise the business model.
Markets will be watching to see how Selfwealth responds at its investor day on Tuesday. The company’s major shareholders include Melbourne-based fund manager Datt Capital, tech entrepreneur Lee Gaywood and Gannet Capital.
Introducing your Newsfeed
Follow the topics, people and companies that matter to you.
Find out more