Yesterday, Netfonds announced to have acquired a majority stake in “Meine Finanzkanzlei GmbH” (“MFK”) through its fully owned subsidiary NVS Netfonds Versicherungsservice AG. In detail:

We assume that Netfonds has acquired a stake of 65-85% (eNuW) at a low to mid, single digit EV/EBITDA multiple (eNuW). As the network of advisors from MFK has already been cooperating with NVS  for many years, we do not expect a significant increase of gross sales. Stand alone, MFK should generate gross sales of c. € 1.5-2.0m (eNuW). Due to synergy effects, we expect a positive EBITDA effect of some € 0.3-0.5m (eNuW).

Importantly, MFK is actively supporting NVS in customer advice for banks that are affiliated with NVS. These services are increasingly important for banks, hence providing a significant growth potential for Netfonds going forward.

Overall, we consider the acquisition as highly value accretive. While the price should have been absolutely reasonable, MFK is seen to strengthen the insurance division of Netfonds and contributing to its profitability.

More positive newsflow comes from IGBCE Bonusagentur, which extended its cooperation agreement with NVS in connection with the acquisition of MFK. With that, NVS keeps its access to more than 3m potential CareFlex customers. As a strategic partner of IGBCE, MFK should support NVS in the distribution of CareFlex by advising selected private and corporate customers.

Apart from the value accretive acquisition, Netfonds proprietary, 360° finfire platform, which enables onboarded advisors to offer a wide range of investment, insurance, financing and banking solutions to its customers via one holistic platform, remains the company´s key mid- to long-term growth and scalability driver and should start to lift off in FY24.

That, paired with 1) Netfonds market leading position in an oligopolistic market with high entry barriers and long-term structural growth drivers (growing AuM´s and number of advisors, ongoing digitization of the financial sector, stricter regulation), 2) the likely guidance beat in FY23 and 3) the promising mid-term guidance makes the stock a clear BUY with a new PT of € 71.00, based on DCF.