Lighthouse investor Paul Mumford is not impressed with Quilter's to buy the advice network.
While 40% of investors have given the deal the thumbs up, Mumford told Wealth Manager that he would oppose it, saying he was 'angry' at the firm's management for 'selling investors down the river'.
He highlighted Lighthouse's £10 million in balance sheet cash and a market cap of just $40 million as an indication that Quilter had bagged an exceptionally good deal.
'Lighthouse has cleaned up its business and has been signing up lots of new clients,' Mumford said. 'On a five to 10-year view this is a company that could grow phenomenally.'
He added: 'There is nothing wrong with this company and other firms should not let this opportunity go begging. In five years it could easily have a market cap of £100 million and £20 million on its balance sheet.'
Quilter’s bid at 33p per share represented a 24% premium to Lighthouse’s closing share price of 26.5p on 2 April.
The news sent shares rocketing 21% to 32.1p today, meaning Mumford has made a small fortune from the investment.
He first bought into Lighthouse in 2010 when he snapped up one million shares at 9p each. He disclosed a stake of around 4% in Lighthouse in September 2012, when shares were trading at 5.5p.
While on the surface Quilter's premium looks juicy, Mumford highlighted that shares peaked at 40.5p last July, another factor underlining how good the deal is for Quilter.
‘Quilter’s bid for Lighthouse does not adequately value what is a unique and strongly growing business,’ Mumford said.
Mumford played a key role in blocking AFH's attempt to buy Lighthouse for £17 million in 2016 and indicated he could go to similar lengths to try and prevent the Quilter dealing going through.
‘We fought off predatory bids in the past when the share price was down at about 3p. This time, though, there must plenty of other suitors interested in buying the company at a price that reflects the considerable growth potential from its list of blue chip clients, which is likely to grow.’
Lighthouse’s biggest shareholder is ISPartners Investment Solutions - which houses David Newton’s Helium Special Situations fund – which owns around 25% of the business.
Other big investors include Simon Knott (pictured above), whose fund firm Discretionary Unit fund managers owns 13.3% of the business.
The Liontrust UK Micro Cap fund, managed by the Citywire-rated team of Anthony Cross, Julian Fosh, Victoria Stevens and Matthew Tonge, and the Marlborough Nano-Cap Growth fund, managed by Giles Hargreave, David Walton and Guy Feld, own 2.43% and 1.57% respectively.
The acquisition was made through Quilter’s advice arm, Intrinsic, and is expected to complete in the second quarter.
Intrinsic expects the Lighthouse Group's Communities and Wealth advisory channels to join its current adviser network, which is one of the largest in the UK with around 3,500 advisers on its books. Lighthouse has around 400 advisers in its network.
'The acquisition presents an opportunity to combine the expertise and capabilities of both businesses to accelerate our ability to provide customers with quality controlled financial advice,' Intrinsic CEO Andy Thompson said.