Market saw a tremendous surge in share price of the investment platform provider, Netwealth (ASX: NWL) as soon as the group made an ASX debut on November 20, 2017. The stock, which was issued at $3.70 a share, surged over 40% with its opening price of $4.88 in the early trading on said date. The gain thus led the group attain a market capitalisation of over $1 billion. The listing outcome has been hailed by the founders Michael Heine, Matt Heine and Leslie Heine, who own 63.6% of the shares.
 

Net Funds Flows for 12 months to June 2017 (Source: Company Reports)
 
With this, Netwealth has joined the listed bandwagon of providers of wealth management products and services to clients through an in-house platform, and aims to compete with the traditional banking sector sharks. NWL has over 2000 financial advisers and planners using its services, and its funds under management and administration stand at $15.7 billion, as at September 30, 2017. The group’s FY17 after-tax profit was reported to be $13.55 million, up 48% over FY16; and the group has been cited to be one of the fastest growing businesses in Australia.
 

-Aims to benefit from client base: It is worth noting that institutional investors bagged about 60% of the IPO shares and 40% went into the kitty of retail investors. The group had proposed many offers to its advisers having a long-term relationship with the group and this helped during the IPO. NWL considers growth to be coming in from its basket of clients and aims to benefit from the base of advisers who have been reluctant to be associated with the banks given the ongoing challenges in the banking sector and restrictions posed by the regulatory processes. The group thus intends to get a boost from the $750 billion platform market that appears to be growing at 10% per annum.

-Independent Platform: The group is said to be doing business independently and is not aligned with any other financial services’ group or bank. This can be a boon or a ban depending on how one looks at the growth prospects and whether the group can continue with the self-driven stride. The group also aims to expand its share within the $2.3 trillion superannuation industry, and at the same time, proffer more services for investors looking beyond superannuation.

-Innovation as the foundation: The group aims to dive through the investment platform market based on innovative technologies that can help it secure a greater pie of market share while the traditional banking sector is yet to build on similar lines. The group looks to offer options disruptive to the incumbents.
 

It is worth a watch whether NWL can perform to the likes of Hub24 and Praemium or better, who have shown momentum over the past one year in the sector. Meanwhile, market expects group’s revenues for 2018 to be $82 million and earnings before interest, tax, depreciation and amortisation to be $40 million. Given the current high share price trading scenario, investors can be watchful for any dip to evaluate an investment prospect.

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