The sale of non-core financial advisory units was a theme this month: Lloyds Banking Group sold its remaining stake in St James’s Place; The Oval Group announced that they have entered a period of exclusivity on the sale of their IFA subsidiary, Oval Financial Services; and Booth Ainsworth Chartered Accountants sold its financial services arm to Prest Financial Planning.
Elsewhere in the financial advisory and wealth management area, Ashcourt Rowan agreed to acquire UK Wealth Management, with client assets of £1.3bn, for up to £14.25m and it was rumoured that Old Mutual Wealth is in talks to buy the adviser network Intrinsic, which acquired Positive Solutions from Aegon in June 2013. Broadstone acquired Blythwood Group, Nestor Partnership was subject to a management buy-out, and the consolidators continued to be active with Bellpenny acquiring MGW Ltd, AFH Financial buying Michael Mac Wealth Management and Towry acquiring Lighthouse’s 50.1% stake in Deverill Black & Company for £0.5m. In addition, IFG Group confirmed that it had received an approach from a party who may offer to buy the company.
In fund management, Brompton Asset Management acquired the WAY Group’s global fund range with a total of £148m AUM, Brooks Macdonald signed an option agreement to acquire Levitas Investment Management with £60m AUM and one of the co-founders and fund managers of Hexam Capital Partners, Bryan Collings, sold his stake to his colleagues.
In other areas of the sector, Sterne Agee closed its purchase of the London-based brokerage firm Yorvik Partners and the management of Envestors Ltd, a provider of specialist corporate finance advisory services, bought the business from Braveheart Investment Group.
On the international stage and involving companies with substantial interests in the UK, Gottex Fund Management and EIM Group reached agreement on the proposed merger of their business and KKR, the private equity group, agreed to buy KKR Financial Holdings in an all-share deal, valuing the corporate debt investor at $2.6bn.
The fund management space saw a historic take-over this month when Aberdeen Asset Management agreed to acquire Scottish Widows Investment Partnership in a deal worth £560m, rising to a possible £660m. As a result of the deal, Lloyds Banking Group will take on a 9.9% stake in the fund management group and introduce a strategic relationship between the organisations. Elsewhere in fund management, Charles Stanley acquired Evercore Pan Asset Capital Management.
There was also a landmark transaction this month in the retail financial advisory sector, with 3i selling its majority stake in Bestinvest to funds advised by Permira. This is the largest M&A transaction in the sector for over three years. Also notable was Russell Investments’ agreement to acquire On-Line Partnership Group, the parent company of the In-Partnership and Whitechurch networks, marking the first new major entry into the sector this decade. In addition, the sector saw AFH Financial continuing the consolidation of the market with the acquisitions of Origin Financial, AG Financial Planning and Robert Magee & Associates, and it was announced that the ISP Helium Special Situations fund has raised their stake in Frenkel Topping to 15% via the purchase of James Brearley’s 5.42% holding in the company. Overseas, DeVere Group acquired the IFA Precision Group Asia in Hong Kong.
Investments continued to flow in from overseas, including: ECOM AgroIndustrial Corp Ltd of Switzerland acquiring the commodity trading arm of Armajaro Holdings; Somers Ltd (formerly Bermuda National) reaching an agreement on the terms of a recommended cash offer for Westhouse Holdings PLC; Guardian Capital Group of Canada agreeing to acquire Zephyr Management (UK) Ltd, the UK subsidiary of Zephyr Management LP and manager of an emerging market equity fund; Sea Port Group Securities LLC of the USA buying Amias Berman & Co LLP, a fixed income agency brokerage.
There was market speculation about the break-up and disposal of Sesame Bankhall Group and that Lloyds Banking Group is set to further reduce its 22% stake in St James’s Place. It was also rumoured that Permira is close to acquiring Deutsche Bank’s wealth management business.
Abroad, Aviva sold its 39% stake in the Italian insurer Eurovita Assicurazioni to JC Flowers for €33m of cash and Royal London announced a management-led buyout of Royal London 360⁰ on the Isle of Man, backed by funds advised by Vitruvian Partners. It was also confirmed that Resolution is in discussions over a possible disposal of its Luxembourg-based Lombard division, the unit-linked life assurance provider.
There was action in the fund management space this month, including: Liontrust acquiring North Investment Partners; Northill Europe Holdings SARL agreeing to acquire the entire issued share capital of Alpha Strategic Plc; and, according to the press, Lloyds Banking Group is closing in on a deal to sell Scottish Widows Investment Partnership, with Aberdeen Asset Management, Macquarie and Natixis among the bidders. In a related sector, Chesnara Plc agreed to acquire Direct Line Life Insurance Company Ltd, from its parent company Direct Line Insurance Group Plc, for a total cash consideration of £39.3m. Aberdeen Asset Management Plc was also busy abroad acquiring Saxo Properties A/S in Denmark.
Similarly, the IFA sector was very active: AFH Financial acquired CH Financial in a deal worth £1m; Bellpenny acquired Meridan Park Associates Ltd and a client bank from Spofforths Financial Planning; Paradigm Norton Financial Planning Ltd acquired Direction Financial Planning LLP; Jones Sheridan Financial Consulting Ltd acquired Wealth & Trustee Management Ltd from Grindeys Solicitors Ltd; Wealth Solutions (UK) Ltd acquired Langleys Financial Planning Ltd; Jelf Group Plc acquired a majority stake in Laterlife.com Ltd, a provider of a website specialising in retirement planning; and Caerus completed the acquisition of Paradigm Financial Advisers. In addition, Fidelity agreed to buy Annuity Direct and its holding company Retirement Angels.
In the other parts of the Investment sector: SimplyBiz completed its buy-back of 10% of shares in the company from Standard Life and Sterne Agee, an American financial services group, agreed to purchase Yorvik Partners LLP.
The IFA industry continued to have deals flowing, including: Towry acquired Bluefin Personal Consulting with some £500m of client assets under advice from AXA UK and also bought Conclusion Financial Planning with £15m of client assets under advice; Attivo Group acquired the £60m client book of Valiant Financial; and Ascot Lloyd Financial Services acquired Ensors Financial Planning.
In other areas of the investment sector, TRG Management LP (trading as The Rohatyn Group), a US asset manager, agreed to acquire Citi Venture Capital International, a UK private equity specialist owned by Citigroup Inc; Earthport Plc, a provider of secure electronic payment systems, agreed on a recommended cash offer to acquire Baydonhill Plc, a foreign exchange services business; Ocean Equities, a stockbroker and corporate finance adviser, was acquired by Pareto Securities, a Norwegian investment bank; and London Capital Group agreed to sell its spread betting services subsidiary, ProSpreads Ltd, to Apostar Holdings, a Gibraltar-registered company.
It was also rumoured that Singapore's sovereign wealth fund is poised to become a big shareholder in Rothesay Life as the owner Goldman Sachs prepares to sell almost two-thirds of the pensions insurer in a deal valuing the operation at about £900m, and that Clubfinance is in discussions to acquire the client bank of Paymemy.
A few smaller deals were announced in the investment management space. Hansa AG struck a deal to buy the majority of SVG Investment Managers and holdings in a number of SVGIM's managed funds; Ashcourt Rowan agreed to buy the assets of the discretionary fund management firm Generali Portfolio Management UK in a deal worth up to £2.1m and Prestige Fund Management purchased a significant equity stake in Methexis Holdings, the owner of Methexis Capital Advisors, a UK-based regulated investment manager.
In the life assurance sector there were plenty of rumours about imminent deals: Goldman Sachs is planning to sell a majority stake in the specialist pensions insurance provider Rothesay Life. Following the announcement by Friends Life, the parent of Sesame Bankhall Group, that it is putting the business up for sale, it was rumoured that both SimplyBiz and Threesixty have expressed interest in acquiring support services provider Bankhall were it to be separated from Sesame. There were also rumours about Standard Life edging closer to a sale of its 10% stake in SimplyBiz to the directors of SimplyBiz. Standard Life owns 100% of SimplyBiz's competitor Threesixty.
In the financial advisory space, Howden Insurance Brokers, part of Hyperion Insurance Group, acquired employee benefits consulting and insurance broking service provider Workplace Pension Solutions. Also, a number of client banks changed hands: Sanlam Private Wealth bought the client banks of Conforth Consultants and Wealthport; Nexus IFA acquired the client bank of Surrey-based IFA firm Pensionline and Bellpenny acquired the business of KM Financial Advisers. It was also rumoured that Towry is in talks to acquire Axa's Bluefin Personal Consulting.
Most of the action in the asset management space was represented by Punter Southall Group being involved in two transactions: PSigma Asset Management agreed to be acquired by Miton Group, which is paying up to £13m for the company, whilst its fellow group company, PSigma Investment Management, agreed to acquire the private client business of AXA Framlington.
In the life assurance industry, Phoenix Group had talks with Swiss Re about the possibility of combining their life assurance activities to create a group worth about £3bn, Royal London received regulatory approval for its £219m take-over of the Co-operative Group’s asset management and life insurance businesses which was announced in March, and Prudential agreed to sell its Japanese unit, PCA Life Insurance Co to SBI Holdings Inc.
We also saw further consolidation in the financial advisory sector including: Bellpenny acquiring Entire Wealth Management; Argyle Consulting buying Edinburgh Risk Management; Bradbury Hamilton acquiring Thomas Hall Partnership and Wealth Management; and Stafford House Investments, a subsidiary of Rowan Dartington, acquiring AC Mole Financial Services. But, perhaps the most significant deal in the financial advisory sector was Mattioli Woods’s agreement to acquire Atkinson Bolton Consulting for up to £6m.
The largest deal in the investment sector this month was Henderson Group plc and Teachers Insurance and Annuity Association - College Retirement Equities Fund (TIAA-CREF) agreeing to combine their European and Asian real estate businesses to form a London-based real estate venture, TIAA Henderson Global Real Estate, with AUM of approximately £13.0bn. As part of the deal, Henderson will sell its North American real estate business to TIAA-CREF for £114.5m. Elsewhere in fund management Tikehau, the French fund manager, agreed to buy a 35% stake in Duke Street Capital, the private equity group.
Other larger deals in the Investment sector were both in the annuity space: Legal & General agreed to acquire the closed UK annuity buy-out company Lucida from Cerberus for £151m and Columbia Insurance Co, a subsidiary of Berkshire Hathaway, signed an agreement to acquire Hartford Life International Ltd, the UK variable annuity business of Hartford Financial Services Group Inc, for $285m.
There was also continued movement in the IFA sector with Aegon agreeing to sell its IFA network, PosSol, to Intrinsic, another similar-sized network, and rumours that Aegon is also reviewing its stakes in IFA networks Tenet and Lighthouse. In addition, AFH Financial Group acquired Shape Financial and Argyle Consulting acquired Edinburgh Risk Management.
The sector also included the announcement of Cambridge Mercantile Corp (UK) Ltd having agreed to acquire the foreign exchange division of R Raphael & Sons Ltd, from Lenlyn Holdings Plc. Patrizia have also agreed to buy Tamar Capital Group.
There was limited movement in the fund management and wealth management sectors in May. Whilst Cazenove Capital’s shareholders approved Schroder’s £424m acquisition of the group here in the UK, most of the action took place outside the shores of Britain. Some of the more significant deals included Santander agreeing to sell half of its asset management business to private equity groups Warburg Pincus and General Atlantic for €2.05bn, BlackRock buying the private equity real estate investment advisory company MGPA, with $12bn of assets under management, and Aberdeen Asset Management completing the acquisition of the US fund management house Artio Global Investors.
But deal activity in the advisory space continued. The consolidator Bellpenny concluded several acquisitions this month including the IFA arm of accountancy practice Foot Davson Chartered Accountants, the business of The Country Partnership, and 1,700 clients from the IFA arm of the accountancy firm Price Bailey, boosting its total assets under advice to £850m. Also in the IFA space, Bradbury Hamilton bought two client banks, one from Ian Jones & Associates and the other Ford Reynolds & Associates, increasing its assets under advice by £35m to £300m, and Cowling Rawnsley Financial Solutions acquired a 50% stake in Brown Butler Pensions & Investments.
In the pension administration area Suffolk Life, owned by Legal & General Group, acquired the SIPP book of Skipton Building Society-owned advice firm Pearson Jones, Barnett Waddingham bought the SSAS business of Aegon-owned Origen Investment Services and Cartwright Group acquired the trust-based pensions business of Gallagher Benefits Consulting Ltd.
The change of ownership in the UK asset management industry continued to abound in April. It was rumoured that Lloyds Banking Group is considering selling Scottish Widows Investment Partnership and that Ameriprise Financial, the parent of Threadneedle Investments, is leading the charge for the business. City Financial acquired OPM Fund Management, Maven Capital Partners bought Fundamental Tracker Investment Management and Ocean Dial Group was sold to its management.
Among the SIPP and SSAS providers there was also movement with a private group led by Richard Wohanka acquiring a 60% stake in Hornbuckle & Mitchell Group and Mattioli Woods buying Ashcourt Rowan’s pension administration business. In the advisory space the accountants Holland & Co merged with Monhans Financial Services and Sterling McCall Wealth Management bought Sutcliffe Solloway Financial Planning. KPMG agreed to acquire Makinson Cowell, an independent capital markets advisory firm. Police Mutual aquires Police Healthcare Scheme from the West Midlands Police Benenolent Fund.
In the international arena Schroders completed the acquisition of STW Fixed Income Management in the USA, Blackstone agreed to buy the private equity unit of Credit Suisse, and a consortium comprising The Carlyle Group, Stone Point Capital, clients of Pictet & Cie and funds managed by Edmond de Rothschild Group, completed the $665.5m acquisition of Duff & Phelps, the international financial advisory and investment banking group.
March ended a quarter when we saw more deal activity in the investment management space than in any previous quarter for the last two years. Transaction values exceeded the aggregate for the previous four quarters combined and included some landmark deals: Schroders made an agreed offer of £424m for Cazenove Capital Management, the largest acquisition in the history of Schroders; Royal London acquired The Co-operative Banking Group’s life assurance and asset management businesses in a deal worth up to £219m; Bermuda National entered into an agreement to acquire 62.5% of JO Hambro Investment Management from Credit Suisse for £50m; Gottex Fund Management acquired a majority interest in Frontier Asset Management; and Principal Global Investors LLC agreed to acquire a 55% stake in Liongate Capital Management LLP. It was also reported that Credit Suisse is set to acquire Morgan Stanley’s European and Middle Eastern wealth management arm with $13bn of client assets and that Lloyds Banking Group took advantage of the strong share price of St James’s Place and reduced its 52% stake in the group to 37% via an institutional placement.
Minority stakes changed hands with Investec selling a 15% stake in its asset management division to a group of staff for £180m and BlackRock accumulated more shares in Jupiter Fund Management bringing it to a total of over 11% of the share capital.
In the financial advisory arena, Towry acquired Norscot Financial Services and George Square Fund Managers, IFA consolidator Moneygate bought a stake in advisory firm Group Rapport, Bradbury Hamilton acquired the client banks of MC Associates and Squire John, and LEBC bought out the IFA network Sesame’s 10% stake in the business.
In the other areas on the sector, Punter Southall Health & Protection Holdings acquired Enrich Reward, the employee benefits consultancy to form one of the largest, independent health and protection intermediaries in the UK, Sipp provider Dentons acquired RSM Tenon’s Sipp arm and Antrams Financial Services acquired execution-only platform Moneyspider.
The UK wealth management industry continues to undergo change with the announcement of several M&A deals this month: The Scandinavian banking group, Handelsbanken, acquired Heartwood Wealth in a move that will see the bank launch wealth management services for UK clients; Standard Life bought Newton Investment Management’s wealth management arm for up to £83.5m; Moneygate Group bought Watermark Wealth Management; and distributor influenced fund firm Allium Capital was sold to an unnamed firm.
Similarly, in the IFA sector, Friends Life put Sesame Bankhall Group, the country’s largest IFA network, up for sale and appointed Barclays Investment Bank to find buyers for the business. At the smaller end of the scale Fiveways Financial Planning bought Harrisons Financial Advisers, Ludlow Wealth Management Group acquired Murphy & Associates, Wilson Grange acquired Schofield Hall Financial Management, Portfolio Financial Consultancy acquired Barrett Bright, and Sanlam Private Wealth acquired Professional Connection and Berkeley Associates.
Other parts of the investment sector saw Aberdeen Asset Management acquiring a 50.1% stake in private equity specialist, SVG Advisers, for £17.5m, and Sanlam selling its 21.6% stake in Punter Southall to management, bringing the financial consultancy group back under full independent ownership. Also, stockbroker Seymour Pierce was broken up, with the broking business being sold to Cantor Fitzgerald and the private wealth management business to WH Ireland, and BGC Partners acquired currency broker Sterling International Brokers from Skipton Building Society. MGM Advantage agreed to sell its new business franchise to private equity group TDR Capital, PMI specialist broker, Chase Templeton, secured investment from Palatine Private Equity and it was rumoured that MetLife is preparing to sell it UK bulk annuities business.
There was interest from the US in the sector with Compass Advisers, the US investment banking group, merging its London business with UK rival Richmond Park Partners and US private equity firm ABRY Partners taking a majority stake in Thomsons Online Benefits, the employee benefits specialist, valuing the business at close to £100m. Also, with some bearing on its substantial operations in the UK, BlackRock agreed to buy Credit Suisse’s ETF business with $17.6bn AUM.
It was rumoured that Ignis’s owner, Phoenix Group, have rejected a number of take-over approaches including one from Aberdeen Asset Management and reported that Legal & General is set to acquire Cofunds, the investment platform provider. Way Fund Managers signed an agreement with International Financial Data Services to acquire its ACD subsidiary IFDS Managers.
In the IFA space, Chelmsford Financial Management merged with Whitechurch Securities and Fiveways Financial Planning acquired Harrisons Financial Advisers.