Raisebook

Australian Funds Under Management Forecast to Reach $983BN in 2018
IXT Limited
IXT Limited
ASX:IXT
  • IXT Limited provides services to stakeholders and participants in the asset and wealth management industry.
  • Australia is the sixth largest funds management industry in the world, with funds under management (excluding superannuation funds) forecast to reach $983 billion in 2017-18.
  • IXT offers online technology-based fund administration solutions for fund managers and members.
  • Funds will be used to invest in the R&D of technology, secure future strategic acquisitions, and increase GMF Management’s Net Tangible Assets position.
  • IXT’s Management have extensive industry knowledge and working relationships with many fund managers and industry professionals around Australia. On this basis, Management is well placed to identify quality target businesses for potential acquisition.
Raise Amount
$3,700,000
Offer Price
$0.2000
Closes
Dec 11, 2018

IXT Limited was established to acquire Global Merces Funds Management Limited (‘GMF Management’) and FUND ID Pty Ltd (‘FID’).

These two companies provide complementary services to stakeholders and participants in the asset and wealth management industry.

Australia’s funds management industry has grown strongly over the last two decades, and it is the sixth largest funds management industry in the world.

Funds under management invested by Australian fund managers on behalf of clients (excluding superannuation funds) are forecast to reach $983.0 billion in 2017-18.

IBISWorld reports that the funds management services industry has performed strongly over the past five years with industry revenue expected to grow at an annualised 3.8% over the five years through 2017-18 to $8.0 billion.

A growing inflow of funds and positive investment returns are forecast over the next five years with industry revenue projected to grow at an annualised 0.8% over the five years through 2022-2023 to $8.3 billion.

The principle objective of IXT is to focus on providing the following services through the respective acquisitions:

  • Funds management through GMF Management, including advisory, Responsible Entity, Trustee, Custodian and marketing and distribution services; and
  • Fund administration services through FID, including online technology-based fund administration solutions for fund managers and members.

The Offer

IXT Limited (ACN 627 918 727) is raising a minimum of $3,700,000 by offering 18,500,000 shares at the Offer Price of $0.20 per Share with the ability to raise up to $3,300,000 of oversubscription (16,500,000 additional Shares).

These funds will be used to invest in the research and development of technology and software, secure future strategic acquisitions, provide working capital, increase GMF Management’s Net Tangible Assets position, fund the expenses of the Offer and the associated costs of listing IXT on the ASX.

Sequoia Corporate Finance Pty Ltd is the Lead Manager of the offer.

Raisebook is taking bids on behalf of the Company (minimum bid is $2,000).

The offer of the securities are made in, or accompanied by, a copy of the disclosure document which can be obtained by clicking on the "ACCESS DISCLOSURE DOCUMENT" button on this page.

Anyone who wants to acquire the securities will need to complete the application form that will be in or will accompany the Disclosure Document. Before making an investment decision, potential investors should read the Disclosure Documents entirely, and seek professional financial advice.

Please note, the industries in which IXT conducts its business, being, private wealth advice, corporate advisory, securities trading, equities research and funds management are very competitive markets with many market players of varying scale and market influence. There are many other companies that offer non-traditional financial and technology services that are closely related to the services provided by IXT. As technology and regulation evolve, the service offerings of these companies will also evolve and may potentially pose a competitive threat to IXT.

Key Offer Statistics

Min. Subscription Max. Subscription
Offer Price per Share $0.20 $0.20
Shares currently on Issue* 55,986,679 55,986,679
Number of Shares available under the Offer 18,500,000 35,000,000
Number of Broker Pool Shares to be issued on Completion of the Offer** 500,000 500,000
Shares issued for acquisitions 13,275,000 13,275,000
Total number of Shares on issue following the Offer 88,261,679 104,761,679
Gross proceeds from the Offer*** $3,700,000 $7,000,000
Market Capitalisation at the Offer Price **** $17,652,335.80 $20,952,335.80

Notes:

* Includes Non-Executive Director Shareholding of 2.225.000 Shares, 1,000,100 Shares held by Holly Grofski personally and 18,533,234 Shares owned by entities associated with Holly Grofski.

**The Broker Pool Shares to be issued to the Lead Manager amount to $100,000.

***Calculated as the number of Shares issued under the Offer multiplied by the Offer Price.

****Calculated as the total number of Shares on issue on Completion of the Offer multiplied by the Offer Price. Shares may not trade at the Offer Price post-Listing as highlighted in Section 3 of the Disclosure Document.

Please see the Disclosure Document for further details on the Offer Statistics.

Key Dates

Closing Date Tuesday 11 December 2018
Allotment and issue of Shares Monday 17 December 2018
Expected dispatch of Shareholder statements Tuesday 18 December 2018
Shares expected to begin trading on ASX Friday December 2018

What are the benefits of investing in IXT?

Following close of the Offer, IXT will be well positioned to generate Shareholder value by offering the following benefits:

  1. Traditional and technology-based services to the asset and wealth management industry.
  2. Based on the industry report in Section 5 of the Disclosure Document, the demand for Fund Administration and Fund Management services is growing.
  3. IXT has a well-defined strategy, with a targeted short and medium-term growth program focused on expanding FID and GMF Management. This includes identifying and securing strategic acquisitions of, or investments in, assets that will complement the current assets being acquired by IXT.
  4. IXT has an experienced board and management team, with a range of development, management, commercial and technical skills in the financial industry.

Please note, an investment in IXT carries risk, including those specific to IXT’s business activities, the industry in which it operates, and those more general risks associated with investing in the share market. Many of these risks are outside the control of IXT, its Directors and officers. Consequently, the Shares offered under this Prospectus carry no guarantee in respect of profitability, dividends or return of capital. Neither IXT nor its Directors nor any party associated with the preparation of this Prospectus warrants that any specific objective of IXT will be achieved.

Source of Revenue

IXT will primarily derive its income from the provision of Fund Management and Fund Administration services to investment managers and fund managers.

IXT’s services and associated revenue streams can be segmented as follows:

GMF Management

  • Establishment fees for new funds
  • Trustee/Responsible Entity Fees
  • Compliance management
  • Advisory fees

FID

  • FUND.ID administration fees
  • InvestXpress administration fees

Other

IXT will also derive a proportion of income from cross-selling complementary services such as:

  • Licensing of technology platforms
  • Marketing and distribution services
  • Corporate advisory services.

The key drivers of revenue include:

  • number of funds managed by fund managers;
  • number of members within a fund
  • number of transactions processed; and
  • funds under administration.

Until such time as IXT secures funds under management of sufficient scale, its primary source of revenue will be monthly engagement fees payable for fund administration services and management services.

Fund Management

Establishing a new fund is a complex, costly and time-consuming process that traditionally requires the engagement with and services of various professional advisors.

The list of services needed to launch a fund is visually summarised in the figure below:

In respect to the services needed to launch and manage a fund, IXT offers the following:

  • Advisory services in relation to the establishment of new funds.
  • Responsible Entity for hire - to facilitate member protection in accordance with the Corporations Act and the fund governance documents.
  • Trustee for hire - The role of a Trustee is similar to that of a Responsible Entity however applies to unregistered managed investment schemes.
  • Custodian Services - safeguarding, protecting and administering assets of a managed investment scheme against the risk of theft or loss.
  • Marketing and distribution service

Currently GMF Management administers four external client funds:

  1. GMF Management acts as Trustee for Vested Capital Property Fund. Vested Capital Property Fund is:
    • an unregistered scheme;
    • provides access to property investments; and
    • currently has funds under management.
  2. GMF Management acts as Trustee for Upsense Media Capital Fund (AFSL Authorised Representative No. 1266700). Upsense is:
    • an unregistered scheme;
    • provides investment opportunities to institutional and private members in the entertainment and media sectors;
    • currently has funds under management; and
    • further details regarding this fund can be found at: http://upsensecapital.com/
  3. GMF Management acts as Responsible Entity for CoVesta (ARSN 625 053 803). CoVesta is:
    • a registered scheme;
    • provides access to fractional property investments;
    • currently has no funds under management having launched earlier this year; and
    • further details regarding this fund can be found at: https://www.covesta.com.au/
  4. GMF Management acts as Trustee for PEF Capital (AFSL Authorised Representative No. 1262437). PEF Capital is:
    • an unregistered scheme;
    • provides access to derivatives trading on listed equities;
    • currently has no funds under management having launched earlier this year; and
    • further details regarding this fund can be found at: https://www.pefcapital.com.au/

Fund Administration

IXT offers online technology-based fund administration solutions for fund managers and members. IXT has specifically developed regulatory technology ‘FUND.ID’ and ‘InvestXpress’.

FUND.ID is an online platform accessible 24/7 by fund members and fund managers that automates and keeps real time account of the administration aspects of managed funds.

To further streamline the fund administration process, FID has developed a technology product known as InvestXpress. InvestXpress is an automated secure online application for accessible 24/7 by potential members and fund administrators.

The product replaces:

  • paper application forms with ‘wet’ signatures;
  • manual compliance reviews with automated compliance reviews; and
  • the existing fund application systems with a simple online form.

InvestXpress provides fast identity verification online, without the requirement of a member to submit paper certified posted copies.

Strategy and Outlook

IXT Board and Management aim to achieve growth organically and through strategic acquisitions.

Responsible Entities and Trustees are required to maintain minimum Net Tangible Assets depending on the nature and scale of the operations. To allow for future growth and compliance with GMF Licence requirements, part of the proceeds raised will be allocated to increasing the Net Tangible Assets position of GMF Management.

IXT’s Management have extensive industry knowledge and working relationships with many fund managers and industry professionals around Australia. On this basis, Management is well placed to identify quality target businesses for potential acquisition.

Management of IXT have entered into verbal negotiations with a number of unrelated and independent potential vendors in relation to the acquisition of their respective technology and software businesses or products (as applicable), as well as to acquire a number of small Responsible Entity service provider businesses. At this stage, these negotiations are confidential, non-exclusive and non-binding.

Each technology / software target offers a complementary service that Management believe is capable of being integrated into the existing IXT model and service offering.

IXT intends to focus on:

  1. Continuing to deliver quality service to existing and new funds;
  2. Ongoing development of innovative service options that are complementary to existing services; and
  3. Expanding the capabilities and service offering of the FUND.ID and InvestXpress technology.
This deal closed on December 11, 2018