Generation Development Group Ltd (ASX: GDG) completed two transformative acquisitions in FY 2025, positioning the company for meaningful growth over the medium term.
In August, the business completed the acquisition of the remaining 50.8% stake in Lonsec it did not already own. In February, Generation Development Group acquired asset consultant EVIDENTIA, combining the business with the investment solutions (discretionary accounts, managed accounts) arm of Lonsec to form EVIDENTIA Group.
The company now operates three distinct divisions: Generation Life, Lonsec, and EVIDENTIA Group.
You can find our past coverage of Generation Development Group here.
Led by former Olympic swimming champion Grant Hackett, the company has been a fundie favourite in recent times, with the GDG share price up over 151% over the past 12 months.
Generation Development Group FY 2025 Results
A brief look at the financial results will tell you why. Although the group financials are skewed by the acquisitions, the individual divisions have delivered robust growth.
Key group financial results for FY 2025 include:
- Revenue growth of 191% to $141.3 million
- Underlying earnings before tax growth of 353% to $45.7 million
- Underlying net profit after tax growth of 170% to $30.2 million
- Earnings per share of 11.63 cents, up from 3.01 cents in FY 2024
- Total dividend of 2.00 cents per share
The company cites the Plan for Life, Investment Bonds Market Report for period ended 31 March 2025, Generation Life, which says it attracted 57% of all new investment bond inflows in FY 2025, with the division again surpassing competitor Australian Unity on a total market share basis. Growth is expected to be well supported in the coming years by proposed changes to superannuation.
Division 296 introduces an extra 15% tax (bringing the total tax on those earnings to 30%) on superannuation balances above $3 million to discourage Australians from using super as a tax shelter. As a result, investment bonds become more attractive with given they are taxed at a maximum of 30%.
The legislation also proposes to tax unrealised capital gains above the $3 million threshold.
In May, Generation Development Group signed an agreement with global giant BlackRock to design and market retirement solutions. Additionally, BlackRock acquired a $25 million stake in the company.
It wouldn’t be surprising to see them or another global player take a position in Generation Development Group to establish a foothold in the rapidly growing investment bonds and managed accounts markets.
An 18% rise in revenue, coupled with modest cost growth supported a 51% jump in Lonsec’s underlying profit. Growth mainly came from expanding its managed account offerings (Investment Solutions division) and to a lesser extent a 6% increase in products researched. This is clearly the standout asset in the portfolio as a vital gatekeeper for asset managers looking to be on approved product lists.
Some believe Lonsec’s tick of approval can make or break a fund manager.
EVIDENTIA missed earnings expectations, but still delivered a revenue increase of 63% while underlying net profit after tax doubled to $5.3 million. The combination with Lonsec Investment Solutions has created an asset consultant with $29.6 billion in funds under management, and hypothetically the business should benefit from increased scale.
Generation Development Group finished the year with $180.2 million in cash and no debt.
Generation Development Group Acquires EVIDENTIA
The EVIDENTIA purchase was a head-scratcher. Assuming earn-outs, Generation Development Group paid $360 million for a company generating adjusted EBITDA of $21.0 million next year. The company had just 29 employees, was founded in 2018, and was unusually quiet about who its clients are.
That said, the acquisition thesis does not show up in the current year’s figures. Generation Development Group has made a punt that managed accounts will become the de facto operating model for financial advisors.
According to the InvestmentTrends 2025 Managed Accounts Report, the number of advisors using the structure has increased from 20% to 59% over the past decade. Generation Development Group quotes figures from the Institute of Managed Account Professionals that estimate the managed account market at $206 billion in 2024 to increase to $474 billion in 2030.
Generation Development Growth is banking on that growth coming through. In five years’ time, the hope is EVIDENTIA will be a much bigger managed accounts player delivering meaningful earnings.
Why are managed accounts the preferred solution? The advisor saves time on administration and making investment decisions, allowing them to service the client’s needs and focus on planning rather than investments. More simply, EVIDENTIA is an outsourced chief investment officer.
The biggest obstacle asset consultants face is scale. Next year, EVIDENTIA is expected to earn a revenue margin of 0.10% (10 basis points). That’s a tiny fraction of assets, and means more consolidation is likely to support profitability.
EVIDENTIA is higher quality than your typical fund manager, who lives and dies by their performance table. Consultants are providing diversified portfolios that are less sensitive to headline returns. Furthermore, qualitative factors (client wants less risk, exposure to ethical investments) are weighted more highly, and it’s difficult for an advisor to move their entire client book across to a new consultant.
However, platforms such as Netwealth Ltd, as well as research houses like Lonsec, remain higher quality businesses than a managed accounts provider like Evidentia.
Asset consultants need the research houses to get on approved product lists. But platforms concurrently benefit regardless of which asset consultant an advisor opts for.
Would I Purchase Generation Development Group Shares?
Having a three-time Olympic gold medallist as CEO naturally attracts significant attention to a company. But the bigger benefit in the case of Generation Development Group is that Hackett has had decades of media training.
“We want to make sure that we’ve got that growth profile as 20 to 30% for the next 4 or 5 years in terms of underlying earnings numbers of the business.” – Grant Hackett, Generation Development Group CEO, 28 August 2025
He says all the right things, with the word “growth” mentioned no less than 56 times. Investors have lapped every word, sending the GDG share price to a sky-high price-to-earnings multiple of 66.
That’s too high for me, despite the quality of Lonsec and the growth profile. I’m also cautious that management appears to be seeking more acquisitions, despite completing two major deals in the last 18 months.
The board and key management personnel own around 7.6% of the company, so prospective or current shareholders shouldn’t be too concerned that the company will light capital on fire.
For the time being I’m happy to wait for a pullback.
Editor’s Note: I do own GDG shares, but, noting the valuation, I have sold some in the past, and I will quite possibly sell more in the future; though at this moment, I have not made a decision in that regard.
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Disclosure: The author of this article, Lachlan Buur-Jensen, does not own shares in GDG and will not trade GDG shares for at least 2 days following the publication of this article. The editor of this article, Claude Walker, does own shares in GDG and will not trade GDG shares for at least 2 days following the publication of this article. This article is not intended to form the basis of an investment decision and is not a recommendation. Any statements that are advice under the law are general advice only. The author has not considered your investment objectives or personal situation. Any advice is authorised by Claude Walker (AR 1297632), Authorised Representative of Ethical Investment Advisers Pty Ltd (ABN 26108175819) (AFSL 276544).
The information contained in this report is not intended as and shall not be understood or construed as personal financial product advice. You should consider whether the advice is suitable for you and your personal circumstances. Before you make any decision about whether to acquire a certain product, you should obtain and read the relevant product disclosure statement. Nothing in this report should be understood as a solicitation or recommendation to buy or sell any financial products. A Rich Life does not warrant or represent that the information, opinions or conclusions contained in this report are accurate, reliable, complete or current. Future results may materially vary from such opinions, forecasts, projections or forward looking statements. You should be aware that any references to past performance does not indicate or guarantee future performance.