Why Did Equity Story Terminate Its Baker Young Acquisition Despite Strong Fund Returns?
Equity Story Group reports a strong quarter for its Growth Fund but faces setbacks with the termination of the Baker Young acquisition. The company is now pursuing a significant capital raise and has restructured its board to drive future growth.
- Baker Young acquisition terminated after unmet conditions
- Equity Story Growth Fund outperforms All Ordinaries benchmark by 3.9% in September quarter
- Completed $200,000 capital raise; announced $650,000 convertible loan and $3.54 million entitlement offer
- Significant board changes with new Chair and Managing Director appointed
- Quarterly cash flow impacted by acquisition-related expenses and lower membership revenues
Strong Fund Performance Amidst Strategic Shifts
Equity Story Group Ltd (ASX, EQS) delivered a robust performance for its Growth Fund during the September 2025 quarter, outperforming the All Ordinaries benchmark by nearly 4%. The fund posted an 8.04% return for the quarter and a 10.56% gain over the rolling 12 months, reflecting the company’s proprietary investment methodology. Despite this, the fund maintains elevated cash levels of around 20%, signaling a cautious stance amid ongoing market uncertainties.
Membership subscriptions and revenues from the Wealth Advisory division saw a decline, partly due to management’s focus on the Baker Young acquisition process. Equity Story Securities also experienced a drop in revenues compared to the previous quarter, which had benefited from one-off items.
Acquisition Collapse and Capital Raising Drive
The company’s planned acquisition of Baker Young Limited, initially expected to complete in September, was terminated after key conditions precedent were not met. This setback prompted Equity Story to pivot its strategy, announcing a $650,000 convertible loan from a strategic investor and a fully underwritten entitlement offer aiming to raise approximately $3.54 million at $0.01 per share. These funds are earmarked to support ongoing operations and fuel expansion into the property sector, marking a notable strategic shift for the group.
Board Overhaul Signals New Direction
October saw a significant board reshuffle with Alex Brinkmeyer joining as Non-Executive Chair, David Nolan appointed Managing Director, and Albert Wong AM added as Non-Executive Director. Several previous directors, including the former CEO Shane White, resigned. This leadership renewal suggests a fresh strategic vision as the company navigates its next phase of growth and capital management.
Financial Position and Outlook
Cash receipts for the quarter fell to $159,000 from $311,000 in the prior period, impacted by acquisition-related expenses and reduced revenue streams. Staff and corporate costs increased to $411,000, reflecting the additional resources allocated to the Baker Young deal. Despite a net operating cash outflow of $367,000, the company’s available funding is bolstered by the recent capital injections and financing facilities totaling over $1 million.
Looking ahead, Equity Story’s management remains confident in sustaining operations and executing its growth plans, supported by the strategic investment and entitlement offer. The company’s pivot towards property fund management could open new revenue avenues, but execution risks remain as the market watches closely.
Bottom Line?
Equity Story’s next chapter hinges on successful capital raising and strategic execution after a costly acquisition setback.
Questions in the middle?
- Will the $3.54 million entitlement offer close successfully and on what timeline?
- How will the new board leadership reshape the company’s strategic priorities?
- What are the detailed reasons behind the Baker Young acquisition termination?
