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LEISURE | Sports & Recreation / Fitness
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Founded Year

2014

Stage

Seed VC | Alive

Total Raised

$1.3M

Last Raised

$1.3M | 3 yrs ago

About The Class

The Class is an NYC-based provider of group fitness classes.

The Class Headquarter Location

22 Park Place, 3rd Floor

New York, New York, 1000,

United States

Latest The Class News

Hub24 to triple customer base with Class deal

Oct 18, 2021

Save Share Wealth administrator Hub24 will branch out from its core market of financial advisers to accountants, lawyers and self-directed self-managed superannuation investors after acquiring ASX-listed Class Limited. Hub24 on Monday launched a bid for Class, a specialist in self-managed super fund and trust administrative software, in a move endorsed by the Class board and valuing the target about $386 million. Hub24 MD Andrew Alcock said he was attracted to Class’ SaaS capability. Peter Braig Shares in Class shot up 62 per cent to a 12-month high of $2.93, while Hub24 shares slumped 1.4 per cent to $32.60, after rallying last week on the wealth platform provider’s release of record quarterly inflows . Hub24 managing director Andrew Alcock said the two companies were a “neat fit”, performing similar functions in different parts of the market. “We’re trying to provide solutions to Australians for retirement and wealth management, and SMSFs and trusts are an important part of that,” he told The Australian Financial Review. Advertisement “Bringing two fintechs together to collaborate is a remarkable step for the good of customers.” The two businesses will be run largely independently rather than fully integrated, with few synergies promised, but Hub24 expects the deal to add 8 per cent to its earnings per share in the 2023 financial year. The acquisition would triple Hub24’s customer base, adding its existing 3201 financial advisers and licensees to Class’ 7771 customers, made up of accountants, lawyers, small-to-medium enterprises, SMSF trustees and auditors. This would reduce Hub24’s reliance on the troubled financial adviser market, which is i n decline and on track to be 50 per cent smaller by 2030 than it was in 2018, before the Hayne royal commission. It would also boost Hub24’s identity as a software-as-a-service provider. The vast bulk (87 per cent) of Class’ revenue of $54.9 million in the 2020-21 financial year was attributed to software subscriptions. Advertisement By contrast, 94 per cent of Hub24’s revenue of $107.8 million came from fees charged to customers of its flagship investment platform, with just 6 per cent attributed to “technology solutions”. Platform fees are under pressure in the wealth management industry as major bank-owned incumbents have slashed their rate cards to compete with challengers such as Hub24. Tale of two premiums Under the terms of the mostly scrip transaction, Class shareholders would receive one ordinary Hub24 share for every 11 ordinary Class shares held, plus 10¢ per ordinary Class share. “The proposal represents compelling value,” said Class chairman Matthew Quinn. “The structure of Hub24’s proposal provides an exciting opportunity for our shareholders to maintain exposure to Class’ growing business, while also sharing in any future upside and combination benefits.” But while both parties were enthusiastic about the transaction, The Australian Financial Review’s Street Talk column – which revealed the deal before the market opened on Monday – reported that the would-be merger partners were touting different premiums to investors. Advertisement Class’ version, valuing itself at $386 million, implies a value of $3.11 per share and equates to a 71.6 per cent premium to the last trading price. However, Hub24 and some equity analysts referred to a lower 52.8 per cent premium, based on the one-month volume weighted average price of both companies. But even at the lower premium, analysts at stockbroker Wilsons said there was scope for “massive valuation arbitrage” for Hub24. “While no revenue synergies were announced, given the complementary nature of the businesses and that [about] 25 per cent of Hub24’s [funds under administration] is invested via SMSFs, revenue synergy realisation over time is likely real,” Wilsons said in a note to clients. Wilsons had speculated in August that Class could be a target for Hub24. It reiterated its bullish “overweight” recommendation on Hub24 shares, which have tripled in value since the royal commission. Aleks Vickovich is the wealth editor. He writes about financial advice, funds management, superannuation and regulation, with a special interest in the next generation of investors. Connect with Aleks on Twitter . Email Aleks at aleks.vickovich@afr.com Save

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Expert Collections containing The Class

Expert Collections are analyst-curated lists that highlight the companies you need to know in the most important technology spaces.

The Class is included in 2 Expert Collections, including Fitness Tech.

F

Fitness Tech

1,260 items

This Collection includes startups developing software and technology to augment approaches to developing or maintaining physical fitness, including workout apps, wearables, and connected fitness equipment.

W

Wellness Tech

1,219 items

We define wellness tech as companies developing technology to help consumers improve their physical, mental, and social well-being. Companies in this collection play across a wide range of categories, including food and beverage, fitness, personal care, and corporate wellness.

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