Fiducian Group Ltd (ASX: FID) is an Australian financial services company, with a market cap of $156 million, that has risen 40% this year. The company has also increased dividends since 2012.
I bought the company in 2013, when it was known as Fiducian Portfolio Services and over this time it has acquired a number of small financial planning companies.
These acquisitions have all been for a consideration of around $1 million, always with cash, so the company is never overstretching itself. The increased funds under management (FUM) can be serviced by the other segments that Fiducian has.
The company offers clients a holistic service, with four key segments: funds management and investment services, wealth management and financial planning services, information technology solutions, and accounting/accountancy resourcing.
The financial services industry has scope to use technological automation to increase back office efficiencies and the innovation prospects are large.
Fiducian has its own technology arm for systems and software solutions and the group invests significantly in building and enhancing technology, including standalone asset allocation/portfolio modelling and portfolio review tools, and information portals and its FORCe software.
FORCe is a leading edge integrated dealer and financial planning software platform providing the financial planning businesses with a core client relationship management platform and fully integrated modelling and reporting tools.
Only having a market cap of $150 million, has meant the company has remained largely under the radar and while not being a dull company, it is not a hot company in a hot industry, (which attracts buyers and pushes up the price).
The volume of trades is still low, with a 30 day rolling average of 10,937 and even though the company has a P/E ratio of 20, which is above the sector average of 17, it's a growth company and I think there is still a long way to go, especially if they keep accumulating FUM, (Funds under management) and keep up with the technological changes in the finance sector.
In the FY 2017 financial year, FUM was up 20% to $5.7 billion, dividend growth was up 24% per annum and NPAT up 24% to $8.7 million.
If the company can keep growing steadily, by acquiring good financial planning businesses and seamlessly integrate these companies and their clients to the other services that Fiducian can provide and keep increasing dividends, the company is on course to become the next IOOF Holdings Limited (ASX: IFL) in my opinion.
