Prestige Wealth Inc. Announces Acquisition of Tokyo Bay

Rhea-AI Summary

Prestige Wealth (NASDAQ: PWM) has announced the acquisition of Tokyo Bay Management for US$1.5 million. The deal structure includes 2.5 million newly issued Class B ordinary shares at US$0.60 per share, plus warrants for 1.875 million Class A shares at US$0.72 exercise price. The warrants become exercisable after six months and expire five years later. The agreement includes retention of key employees and non-compete clauses. The acquisition, expected to close in Q4 2024, aims to strengthen PWM's position in the Asian wealth management industry.

Positive

• Strategic expansion into Asian wealth management market
• Acquisition structured with shares, minimizing immediate cash outlay
• Key employee retention ensures business continuity
• Non-compete agreement protects business interests for three years

Negative

• 2.5 million new shares issuance causing shareholder dilution
• Additional potential dilution from 1.875 million warrant shares
• Total acquisition cost of US$1.5 million plus warrant liability

Insights

Financial Analyst

This strategic acquisition marks a significant move for PWM in expanding its footprint in the Asian wealth management sector. The deal structure is notably favorable, utilizing stock-based compensation at $0.60 per share and warrants at $0.72, minimizing immediate cash outlay while aligning interests through equity participation. The $1.5 million valuation appears reasonable for a wealth management acquisition.

The inclusion of non-compete clauses and retention of key employees strengthens the deal's value proposition. The warrant structure, with a 6-month lockup period and 5-year exercise window, provides additional upside potential while protecting against immediate dilution. The termination of the previous business development agreement suggests a natural progression from partnership to full integration.

Market Research Analyst

The acquisition positions PWM strategically in the rapidly growing Asian wealth management market. Key aspects that enhance deal value include:

• Integration of existing business relationship, reducing operational risks
• Structured retention of talent through equity incentives
• Protected intellectual capital through non-compete provisions

The timing aligns with increasing demand for wealth management services in Asia, particularly as the region experiences significant wealth creation and generational wealth transfer. The deal structure demonstrates careful consideration of shareholder value while providing growth mechanisms.

HONG KONG, Nov. 12, 2024 (GLOBE NEWSWIRE) -- Prestige Wealth Inc. (NASDAQ: PWM) (“PWM”, or the “Company”), a wealth management and asset management services provider based in Hong Kong, today announced that, on November 12, 2024, it entered into a definitive acquisition agreement pursuant to which PWM will purchase all shares of Tokyo Bay Management Inc. (“Tokyo Bay”), a company incorporated under the laws of the British Virgin Islands. The total purchase price is US$1,500,000, subject to customary closing purchase price adjustments, in the form of 2,500,000 newly issued Class B ordinary shares of the Company at a price per Class B ordinary share of US$0.60 to the seller and key employees of Tokyo Bay. The Company will also grant warrants to purchase 1,875,000 Class A ordinary shares of the Company at an exercise price per share equal to US$0.72 to the seller parties. The warrants will become exercisable on the six-month anniversary of the issuance date and will expire on the fifth anniversary from the date on which they become exercisable. In addition, key employees will be retained and continue to be employed by Tokyo Bay after closing of the transaction. The acquisition agreement also includes a third-year period non-competition and non-solicitation covenants from the seller parties. Upon consummation of the acquisition of Tokyo Bay, that certain business development & marketing agreement by and between PWM and Tokyo Bay dated as of June 24, 2024 will be terminated. The acquisition of Tokyo Bay is expected to close in the fourth quarter of 2024 and will enhance PWM’s strategy and development in Asia wealth management industry.

About Prestige Wealth Inc.

Prestige Wealth Inc. is a wealth management and asset management services provider based in Hong Kong, assisting its clients in identifying and purchasing well-matched wealth management products and global asset management products. With a focus on quality service, the Company has retained a loyal customer base consisting of high-net-worth and ultra-high-net-worth clients in Asia. Through the Company’s wealth management service, it introduces clients to customized wealth management products and provides them with tailored value-added services. The Company provides asset management services via investment funds that it manages and also provides discretionary account management services and asset management-related advisory services to clients. For more information, please visit the Company’s website: http://ir.prestigewm.hk.

About Tokyo Bay

Tokyo Bay is a company based in Tokyo, Japan. Founded by experienced professionals, the Tokyo Bay team has accumulated extensive premium client resources and local market knowledge over the past years, providing wealth management services, family affairs services, lifestyle management services and related value-added services to high-net-worth clients in Japan.

Forward-Looking Statements

Certain statements in this announcement are forward-looking statements. These forward-looking statements involve known and unknown risks and uncertainties and are based on the Company’s current expectations and projections about future events that the Company believes may affect its financial condition, results of operations, business strategy and financial needs. Investors can find many (but not all) of these statements by the use of words such as “approximates,” “believes,” “hopes,” “expects,” “anticipates,” “estimates,” “projects,” “intends,” “plans,” “will,” “would,” “should,” “could,” “may” or other similar expressions in this press release. They include statements about the Company’s plans for the business of InnoSphere Tech and Tokyo Bay; anticipated financial and other results from the acquisition of InnoSphere Tech and Tokyo Bay and its integration into PWM; expectations regarding revenue and cost synergies resulting from the acquisition; discussion of other strategic initiatives and related actions; and beliefs, expectations, intentions and strategies, among other things. Forward-looking statements are based on management's current beliefs, expectations and assumptions, and involve a number of known and unknown risks and uncertainties, many of which are out of PWM’s control.

The Company undertakes no obligation to update or revise publicly any forward-looking statements to reflect subsequent occurring events or circumstances, or changes in its expectations, except as may be required by law. Although the Company believes that the expectations expressed in these forward-looking statements are reasonable, it cannot assure you that such expectations will turn out to be correct, and the Company cautions investors that actual results may differ materially from the anticipated results and encourages investors to review other factors that may affect its future results in the Company’s filings with U.S. Securities and Exchange Commission.

FAQ

What is the purchase price for Prestige Wealth's acquisition of Tokyo Bay?

The total purchase price is US$1.5 million, paid through 2.5 million Class B ordinary shares at US$0.60 per share.

When will PWM's warrants issued in the Tokyo Bay acquisition become exercisable?

The warrants will become exercisable six months after issuance and expire five years later.

How many shares and warrants is PWM issuing for the Tokyo Bay acquisition?

PWM is issuing 2.5 million Class B ordinary shares and warrants for 1.875 million Class A shares.

When is the Tokyo Bay acquisition expected to close?

The acquisition is expected to close in the fourth quarter of 2024.