Allfunds Group released its interim results for the first six months of 2022, reporting a year-on-year increase in net revenues of 5% to EUR 259 million. It has also reached an agreement to acquire a majority stake in the share capital of Mainstreet Partners Limited (“MainStreet Partners”), a platform offering a full suite of ESG products including ESG investment portfolios and Scoring&Reporting.
In terms of its results, Allfunds also reported that the platform’s revenue margin stood at 3.5 percentage points, at the high end of its 2022 forecast. In addition, its underwriting revenues increased 58% to €14.6 million, while its adjusted Ebitda was €188 million, up 4% year-on-year and an adjusted Ebitda margin of 73%.
Assets under administration (“AuA”) declined by 3.5% y-o-y from EUR 1,348 billion to EUR 1,301 billion, compared to an industry-wide decline of 7.4% in the same period. Allfunds also reported negative platform services market performance of €132.4bn, down 12.5%, from December 2021, as well as net organic platform services flows of €7.4bn, down 0.7%, from December 2021 (-1.4% annualised), offset by new client migrations.
Allfunds’ business model “has proven to be resilient in periods of increased volatility”. In this vein, they note that its AuA growth continues to outperform markets and the fund industry, as a result of diversification (regional, asset classes, distributors) and secular growth levers (e.g. outsourcing, open architecture wealth management, share gains from other platforms/legacy infrastructure, and wealth/savings demographic growth).
“We benefit from long-standing and deep-rooted client relationships, resulting in very high retention rates (99.9% and 98.0% for distributors and fund managers, respectively, in H1 2022),” Allfunds said.
Strong commercial activity
“Our flywheel effect remains strong: 74 new fund managers and 34 new distributors added in H1 2022,” says the entity, which also highlights a continued increase in market share to 13%. “There remains a significant runway underpinned by the penetration of open architecture, the trend towards outsourcing and the potential to gain share from other legacy infrastructure providers,” they stress.
They have also highlighted the growth of its pipeline: “High confidence in migrations of >€40bn by H2 2022, and acceleration of subscription-based revenues from M&A-related cross-selling initiatives”. Allfunds also maintains that its business model and revenues are “well positioned to capitalise on a market recovery”.
As for its digital ecosystem, they believe it is evolving rapidly, thanks to the integration of recent acquisitions, with subscription-based revenues already representing 6% of total net revenues (c. 10% pro forma for completed M&A), with year-on-year growth of 58%.
“Digital services is a large and growing market benefiting from secular tailwinds, and Allfunds is well positioned for the market thanks to its long-standing relationships with distributors and fund managers. Continued investments in long-term growth initiatives, such as blockchain and private equity markets,” they note.
“The first half of 2022 has demonstrated Allfunds’ resilience to market volatility. Despite negative market performance driven by the global economic impact of the ongoing war in Ukraine and rising inflation, we have delivered growth in net revenues and continued to gain market share compared to 1H 2021. Our outlook for FY2022, assuming flat market performance for the remainder of the year, is for low-single digit growth in net revenues. Once markets recover, we anticipate strong net flows to accelerate AuA growth. I remain excited about the exceptional opportunities for Allfunds ahead, especially in the enhanced digital ecosystem we are creating for our customers. Our strategic focus remains entirely aligned with our client needs and with adding value to our partners; the best proof is the continued enhancement of our platform, witnessed by the organic or inorganic investments as we have done in the first six months of 2022.”
Juan Alcaraz, CEO and Founder of Allfunds
Acquisition of a majority stake in MainStreet Partners
Headquartered in London, MainStreet Partners is the trusted ESG partner of top-tier financial groups, providing a one-stop shop for their sustainability requirements.Founded in 2008, MainStreet Partners has developed a unique platform offering proprietary ESG scores, ESG investment strategies through model portfolios and empowered reporting.
MainStreet Partners’ solutions align strongly with Allfunds’ strategy to provide value-added services to its clients, filling a growing gap in specialised ESG-related services:
- For distributors: providing a full set of ESG tools to help them create an ESG-focused offering, properly assess the ESG profile of funds and portfolios, and report extra-financial performance in a transparent and user-friendly way.
- For fund managers: helping them to analyse the compliance of their funds with relevant ESG regulations, assess the sustainability profile of holdings and produce advanced impact reports.
Allfunds will reinforce its existing offering and strong product suite with the enhanced capabilities and cross-selling opportunities offered by MainStreet Partners. This is in line with the company’s commitment to continually invest in and develop Allfunds’ digital ecosystem for fund managers and distributors and continue to build the most robust suite of solutions available to the entire fund industry. The transaction, which is subject to customary closing conditions, including regulatory approvals, is expected to close in the coming months. Further terms of the transaction have not been disclosed.
