GDG Raises $287.9m Equity to Fund $320m Acquisition of Evidentia with $25bn FUM Combined

Strategic Acquisition to Cement Market Leadership

Generation Development Group Limited (GDG) has taken a decisive step to strengthen its foothold in the rapidly expanding managed accounts sector by entering into a binding agreement to acquire Evidentia Group Holdings Pty Ltd for $320 million. This acquisition, announced on 10 February 2025, is a clear signal of GDG's ambition to become the undisputed leader in Australia's managed accounts market, which is currently valued at over $200 billion and forecasted to grow at approximately 15% annually to $474 billion by 2030.

The deal will merge Evidentia with GDG's existing Lonsec Investment Solutions business, creating a combined entity managing over $25 billion in funds. This scale advantage positions GDG to offer a more comprehensive suite of tailored managed account solutions, enhancing its appeal to financial advisers and their clients.

Financial and Operational Highlights

The acquisition consideration comprises $244.9 million in cash and $75.1 million in GDG shares issued to Evidentia shareholders, reflecting a valuation multiple of 15.2 times FY26 forecast EBITDA. Notably, approximately 33% of Evidentia's key management personnel have elected to roll over a portion of their equity into GDG shares, aligning interests and signaling confidence in the combined entity's future prospects.

GDG plans to fund the cash component and associated costs through a fully underwritten equity raising of approximately $287.9 million, split between an institutional placement and a pro rata accelerated non-renounceable entitlement offer. The offer price of $4.15 per share represents a discount to recent trading prices, a common feature designed to ensure strong investor participation.

Leadership Continuity and Integration Strategy

Retention of Evidentia's management team is a cornerstone of the acquisition strategy. Peter Smith, Evidentia's CEO, will become Executive Chairman of the expanded managed accounts business and join GDG's board, ensuring continuity and leveraging his expertise in tailored managed account solutions and client communications.

GDG will restructure its operations into three distinct businesses: Generation Life, Lonsec Research and Ratings, and the newly formed Evidentia Group, which merges Evidentia and Lonsec Investment Solutions. This multi-brand approach allows GDG to maintain established brand equity while delivering integrated services and deeper investment insights.

Earnings Impact and Growth Outlook

The acquisition is expected to be low double-digit earnings per share accretive in the first full year of ownership (FY26), excluding synergies. This accretion underscores the financial prudence of the deal and its potential to enhance shareholder value. Additionally, a potential earn-out of up to $40 million is contingent on achieving ambitious revenue growth targets, aligning incentives for performance.

GDG's CEO, Grant Hackett OAM, emphasized the strategic fit and complementary strengths of the two businesses, highlighting the enhanced value proposition for financial advisers and clients. The combined entity aims to deliver a more scalable and complete managed accounts offering, supporting better outcomes across the wealth management ecosystem.

Market and Investor Considerations

The equity raising timetable is well-defined, with institutional and retail components designed to maximize shareholder participation while ensuring sufficient capital to support the acquisition and future growth initiatives. GDG directors and senior management have committed to participate in the entitlement offer, reinforcing internal confidence.

While the acquisition presents a compelling growth opportunity, investors will be watching closely how effectively GDG integrates Evidentia and realizes projected synergies. The managed accounts market's rapid expansion offers significant upside, but execution risks remain inherent in such transformative deals.