Markets
360 ONE WAM-ET Money: A win-win deal
Summary
- 360 ONE WAM's acquisition of ET Money leverages high-valued equity for growth, while offering Times Internet an exit option amid fierce competition in the fintech space.
360 ONE WAM Ltd, a wealth manager for ultra-high-net-worth individuals, has announced the acquisition of the ET Money app, owned by Times Internet, for ₹366 crore. The deal is structured with nearly three-fourths of the total consideration paid using 360 ONE’s equity and the remaining in cash.
This deal will result in just 1% equity dilution for 360 ONE, given its market capitalization of approximately ₹28,700 crore. The small cash component of the deal, about 10% of 360 ONE’s net profit for FY24, underscores the strategic use of its highly valued shares. Leveraging its stock, which has gained almost 80% in the past year and is currently trading at 30 times the FY25 estimated earnings per share, as projected by Jefferies India analysts, allows 360 ONE to maximize value while minimizing cash outflow.
Strategic expansion
For 360 ONE, this acquisition aligns with its strategic move into the high-net-worth individual segment, complementing its existing focus on the ultra-high-net-worth segment.
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ET Money’s platform manages assets worth around ₹28,000 crore, meaning the acquisition cost is approximately 1.3% of the assets under management (AUM). The app’s investors present an opportunity for 360 ONE to cross-sell its AMC and other wealth management products, including structured financial instruments.
With 360 ONE’s AUM being almost 17 times that of ET Money in FY24, this deal is therefore more of a strategic acquisition rather than one expected to immediately boost financials. Even if the desired outcomes are not achieved, the minimal equity dilution and small cash outlay ensure that the interests of 360 ONE’s existing shareholders are not significantly impacted.
This deal also offers an excellent exit option for Times Internet. Despite its popularity, ET Money has struggled to convert users into substantial revenue. While it has over 900,000 transacting users, only about 11% are revenue-generating, roughly 100,000 users.
ET MONEY launched three different plans on 12 May: a mutual fund plan for ₹249, an equity plan for ₹349, and a combo plan for ₹399.
As a standalone app, though, ET Money has found it challenging to compete with rivals like Groww, Zerodha’s Coin, and Paytm Money, which are backed by groups with comprehensive financial services offerings, including stock broking, lending, and asset management. Groww's active user base, including stock broking, is nearly 10 times that of ET Money.
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In conclusion, the deal is a win-win for both parties. The high equity component allows 360 ONE to preserve its cash reserves, while Times Internet gains a stake in 360 ONE, allowing it to benefit from the future growth of India’s wealth management sector.
