GDG Raises $288M Equity to Fund $320M Evidentia Buyout

Strategic Acquisition to Expand GDG’s Managed Accounts Footprint

Generation Development Group Limited (ASX: GDG) has taken a decisive step to bolster its position in the Managed Accounts market with the acquisition of Evidentia Group Holdings Pty Ltd for an upfront enterprise value of $320 million. This move follows GDG’s earlier acquisition of Lonsec and aims to create a combined powerhouse managing over $25 billion in funds under management (FUM) across tailored separately managed accounts (SMA), off-the-shelf SMA, and managed discretionary accounts (MDA).

The acquisition is funded through a fully underwritten equity raising of approximately $287.9 million, comprising a $114.4 million institutional placement and a $173.5 million accelerated non-renounceable entitlement offer. Additionally, $75.1 million in GDG shares will be issued to Evidentia’s management shareholders who have elected to roll over a portion of their equity into GDG scrip. The equity raising also includes $30 million earmarked for synergy implementation and future growth initiatives within Evidentia’s business.

Evidentia’s Growth Trajectory and Market Position

Founded in 2018, Evidentia has rapidly grown to become one of Australia’s leading providers of investment management and tailored Managed Account solutions, with a current FUM of approximately $12.7 billion. The company’s growth has been underpinned by a client-centric approach and a highly experienced leadership team averaging over 23 years in the industry. Evidentia targets over $28 billion in FUM and $21 million in EBITDA by FY26, reflecting an ambitious growth outlook supported by strong client relationships and a market-leading Net Promoter Score of 86.

The acquisition complements GDG’s existing Managed Accounts business, Lonsec Investment Solutions, which specializes in off-the-shelf SMA and MDA products. The combined entity will offer comprehensive market coverage with minimal client and product overlap, enhancing GDG’s ability to serve a broader adviser network of over 7,000 professionals.

Financial Impact and Synergies

GDG expects the acquisition to be low double-digit earnings per share (EPS) accretive in the first full year of ownership (FY26), excluding synergies. The deal is structured with a potential earn-out of up to $40 million, contingent on achieving a 46% year-on-year revenue growth for the combined Evidentia and Lonsec Managed Accounts business in FY26. This performance-based component aligns management incentives and underscores confidence in the growth prospects.

Identified synergies include cost savings and revenue enhancement opportunities driven by operational efficiencies and expanded product offerings. GDG’s strong balance sheet and ongoing discussions to secure additional debt facilities provide financial flexibility to support integration and future growth.

Market Context and Growth Outlook

The Australian Managed Accounts sector is a rapidly expanding market, currently valued at over $200 billion and forecast to grow to approximately $470 billion by 2030. Tailored SMA, Evidentia’s core segment, is the fastest growing area within this market. GDG’s acquisition strategy reflects a broader industry trend towards consolidation and scale, aiming to capture increasing adviser demand for bespoke and scalable investment solutions.

GDG’s recent performance reinforces its growth momentum, with record sales inflows and a 31% increase in FUM in the first half of FY25. The company is well-positioned to capitalize on legislative tailwinds, including proposed tax reforms affecting superannuation balances, which are expected to drive further demand for tax-efficient investment products.

Leadership and Integration

The acquisition will see Evidentia’s leadership team remain aligned with GDG through significant equity rollover, ensuring continuity and commitment to growth. Peter Smith, Evidentia’s Chairman and CEO, will join GDG’s board as an Executive Director and lead the combined Managed Accounts segment. The Evidentia and Lonsec Investment Solutions businesses will merge under the Evidentia brand, while Lonsec Research & Ratings will continue to operate independently.

GDG’s management highlights the strategic importance of this acquisition as a logical next step following the Lonsec deal, aiming to become the number one market leader across all key offerings. The integration is expected to unlock substantial scale benefits and enhance adviser support capabilities.