Despite its dependence on banks, it is larger and more profitable than its rivals
Allfunds can comfortably step above the Reddit crowd. The platform, owned by Hellman & Friedman, and connecting savers with fund managers, plans to go public. While its reliance on institutional means the rapid growth of amateur trading will be lost, its size and profitability make a $ 7 billion valuation attractive.
It is a testament to the benefits of not being part of a bank. It started as a Santander unit; Following its sale to a private equity firm in 2013, it has more than tripled the assets it manages to reach 1.2 trillion, offering a wider range of funds and selling them to savers in other entities.
Although it calls itself “wealth-tech”And has chosen to list in the Amsterdam technology center, his model. He continues to make money working with banks and other financial advisers and selling traditional funds and exchange-traded funds to his clients, charging a small commission to the managers. That means it won’t ride the wave of platforms like Robinhood. Although it has prospered outside of Santander, it remains ostensibly dependent on banks.
At least, the assessment that is being considered is not too high. Allfunds generated revenues of 370 million in 2020. It expects to grow organically 15% this year, reaching about 455 million after accounting for an acquisition, according to a presentation to bond investors. Assuming a margin of 72%, a slight increase compared to 2020, would imply an ebitda of perhaps 330 million. A valuation of 7,000 million would be equivalent to a multiple of something more than 21 times. It’s a bit more than Britain’s Hargreaves Lansdown, and a big discount to AJ Bell, with a multiple of more than 30.
But Allfunds is bigger and more profitable than any of them. Its assets grew 24% on average in 2016-20, half thanks to acquisitions, and it enjoys an EBITDA margin of 70%, surpassing the 57% of Hargreaves Lansdown. Sticking with the big banks can continue to pay off.