Deal activity in the Investment sector was subdued in December. Less than a handful of transactions were announced. The private equity fund Livingbridge agreed terms and exchanging contracts to acquire Broadstone Corporate Benefits and Broadstone Risk & Healthcare from fellow private equity fund Oakley Capital. In the wealth management sector, SCD & Co agreed to merge with Hanson Asset Management and to brand the combined entity Hanson Denley Capital Management, and Wealth Solutions acquired Lombard Street Holdings.
FXCM Inc, a leading online provider of foreign exchange trading and related services, announced that it had completed its sale of FXCM Stock Trading, which is the trading name of FXCM Securities Limited, one of two FCA regulated arms of FXCM Inc. in the UK, to AS Expobank.
The private medical insurance specialist, Chase Templeton, acquired the assets of Healthcare Partners, trading as Avanti Healthcare.
Abroad, Guardian Assurance agreed to sell its 19% stake in E-L Financial Services in Canada to E-L Financial Corp.
Tullet Prebon and ICAP, the interdealer brokers, unveiled an agreement in which ICAP will sell its global broking business, which includes brokers, electronic trading and a data business, in exchange for 310m new shares inTullett Prebon, resulting in ICAP holding 19.9%, ICAP’s shareholders 36.1% and Tullet Prebon’s shareholders 44% of the enlarged company that will have £1.5bn of annual revenues.
Oddo & Cie announced that it intends to launch a €760m public takeover bid for the 85% of the Anglo-German bank BHF Kleinwort Benson Group it does not already own in direct competition with Chinese investor Fosun which owns a near 20% stake. On the back of the bid, Societe Generale has negotiated a binding offer with Oddo & Cie to acquire Kleinwort Benson Wealth Management, including KB Bank and KB Channel Islands Holdings, to combine it with their UK wealth subsidiary SG Hambros.
Elsewhere in the wealth management sector, IG Group acquired online wealth manager InvestYourWay to feed into its partnership with BlackRock that is to focus on ETF-based investment portfolios, European Wealth acquired XcapNominees, Chartford Financial Management merged with BHP Financial Planning and Fairstone Group acquired South West Financial Planning.
Eurizon Capital, an asset manager and subsidiary of Intesa Sanpaolo, the Italian commercial banking group, agreed a strategic partnership with London-based SLJ Macro Partners, a provider of asset management, FX overlay and macro research services, for the development of a UK-based asset management business which will be 65% owned by Eurizon Capital and 35% by the founders of SLJ Macro Partners.
Chase Templeton, one of the largest independent brokers of private medical insurance, made its largest acquisition to date with the purchase of the business of Consilium Employee Benefits. In corporate finance advisory services,Clearwater Corporate Finance acquired Core Corporate Finance in Dublin. It was also rumoured that London & Colonial, the SIPP and SSAS provider, is being primed for a sale.
The largest transaction this month was the London Stock Exchange Group’s long-awaited announcement of the sale of Russell Investments. TA Associatesand Reverence Capital Partners are paying $1.15bn for the fund manager which the London Stock Exchange Group acquired as part of its $1.6bn acquisition of Frank Russell last year.
Zeus Capital agreed to buy Novum Securities, the market making business, and China Construction Bank, a subsidiary of China Investment Corp (CIC) announced the acquisition of Metdist Trading, a London-based trader of non-ferrous metals futures.
In the financial advisory space, Rathbone Brothers announced that it will acquire the remaining 80.1% in Vision Independent Financial Planning and Castle Investment Solutions that it does not already own for an initial consideration of £5m plus the net asset value on completion and further payments of up to £13m until 2020. Bellpenny bought Ashton KCJ Financial Planning and Principals in Practice, adding £150m of client assets to the group. Succession Group completed the acquisition of Edinburgh Investment Consultants for £6.2m and Newell Palmer acquired Adams Russell.
September proved to be a busy month in investment management M&A. Aberdeen Asset Management acquired Parmenion, the DFM and platform with £1.9bn AUM, and its sister company Self Directed Holdings. Aberdeen Asset Management also announced that it will acquire Advance Emerging Capital with £409m of AUM. This follows Aberdeen Asset Management’s announced acquisitions of Arden Asset Management LLC in August and FLAG Capital Management LLC in May.
KKR bought a 24.9% stake in Marshall Wace, the hedge fund managing $22bn of assets. KKR is paying for the stake with 7.4m of its own shares worth $147m at the time of the announcement and an undisclosed amount of cash. Legal & General acquired Aerion Fund Management, manager of the National Grid pension fund.
In the life sector it was reported that Phoenix Group Holdings, the specialist acquirer of closed life books, was in talks to acquire Guardian Financial Services from Cinven, before Swiss Re announced that they had agreed to acquire the life assurer for £1.6bn. As mentioned in the Insurance section above but also with relevance for the personal financial planning and employee benefits consultancy sectors, Marsh made a recommended £258m bid for Jelf Group. In the same sector Mattioli Woods acquired Taylor Patterson for a maximum consideration of £8.3m, JLT Employee Benefits agreed to acquire the corporate advisory business of Close Brothers and European Wealth Group acquired the financial planning business of Bells Solicitors.
In the annuity market, Just Retirement Group and Partnership Assurance Group reached agreement on the terms of a recommended all-share merger, worth c. £1.6bn, to create JRP Group. Axa Group was reported to have appointed Barclays to search for a buyer for Axa Wealth with £29.1bn of client assets, including the Elevate platform, SIPPs, onshore bonds, corporate pensions and the multi-manager arm Architas. Mediobanca, the Italian investment bank, agreed to acquire 51% of Cairn Capital, the asset manager with c. $14.7bn under management, for approximately £40m from RBS with an option to buy the rest from management in three years.
In the wealth management and financial advisory market, Equistone Partners completed a £50m buyout of the fast-growing financial education and advice firm Wealth at Work from Palatine Private Equity. Two weeks later Wealth at Work announced the acquisition of Life Academy, one of its competitors. Succession Holding acquired two wealth management businesses from its membership, Highcliffe Financial Management and Highgrove Financial Planning with combined client assets of over £200m for almost £7m. Frenkel Topping bought FC Fund Managers and Tilney Bestinvest acquired Webb Holton. AFH Financial Group acquired Davisons FinancialManagement,Sanlam acquired FA Watts (Investment Managers) and Newell Palmer acquired Vale Insurance Services. Mortgages Made Easy (trading as Contractor Mortgages Made Easy), provider of mortgage brokerage services, acquired Contractor Financials and Wilton Group acquired two SIPP firms, Hartley SAS and The Lifetime Sipp Company, with a total of over £1bn in assets under administration.
Elsewhere in the sector, the PMI specialist, Chase Templeton, acquired Atlas Consulting Group.
We saw action in the private client stockbroking and investment management sectors with St James’s Place announcing that it had agreed to acquire Rowan Dartington, with c. £1.1bn AUM, for an initial consideration of £19m and a further maximum potential future consideration of £15.2m and Redmayne-Bentley acquired Havelock Hunter Stockbrokers. Brown Shipley Coacquired Hampton Dean Holdings, an IFA with over 4,000 clients, and AFH Financial Group acquired Quest Financial Management.
In the other areas of the sector, Willis Group agreed to acquire PMI Health Group, an independent provider of employee healthcare and risk management services, and Chase Templeton acquired Best Go Private, another private medical insurance broker. In corporate finance, McQueen agreed to the sale to Houlihan Lokey, the independent investment bank and, in private equity, Candover Investments agreed a €52m refinancing deal with 17Capital to repay its private placement note providers and meet working capital requirements. Linear Investments, the broker and hedge fund platform, acquired the assets of AQX Securities’s agency execution business from the Aquila Group.
Companies in the sector were also busy abroad including Tullett Prebon, the inter-dealer broker, which acquired MOAB Oil Inc, a US-based provider of independent brokerage of physical and financial instruments in the energy markets, for an initial cash consideration of US$12.3m plus an amount equal to the working capital in the business and Legal & General sold its majority stake in Commercial International Life Insurance Company in Egypt.
The largest deal this month in the sector was Willis Group and Towers Watsonannouncing plans for an $18bn all-share merger to form a global professional services group spanning risk management, insurance broking, pension and investment consulting as also mentioned in the Insurance section above. In April this year Towers Watson was also reported to be one of at least six bidders circling Russell Investments, the US asset manager being sold by the London Stock Exchange Group.
As had been widely speculated beforehand, Caledonia Investments announced that it is to acquire a majority stake in Seven Investment Management (7IM) for £77m, which values the business at £100m and, overseas, Henderson Group agreed to acquire two Australian managers, Perennial Fixed Interest Partners and Perennial Growth Management, with £5.5bn AUM. In a separate transaction, Henderson acquired 90 West Asset Management, a natural resources specialist with £200m AUM, increasing its ownership from 41% to 100%.
The wealth management sector continued to be very busy. The owner of Towry, private equity firm Palamon Capital Partners, is exploring a possible float of the business which could be worth in the region of £600m to £800m according to the Sunday Times. Mattioli Woods acquired Boyd Coughlan for up to £7m and announced that it had also signed heads of terms for the acquisition of another wealth management firm, Succession acquired DNG Financial Solutions for £2.9m. Bellpenny acquired Tudor John Financial Services and Tor Financial Advisers. HFM Columbus acquired Hamilton Field Strategic Planning and Christchurch Benefits. Sanlam acquired Caerus Portfolio Management(CPM) and a 19.9% stake in CPM’s parent, Caerus Holdings, the firm’s advisory business.
Elsewhere in the sector, Woodford Equity Income and Woodford Patient Capital Trust invested £21m in a minority stake in pension and platform provider AJ Bell. Octagonal announced the acquisition of Global Investment Strategy UK, the stockbroking, settlement and custody provider for £1.5m cash and £6.7m in shares.
In an interesting twist, Panmure Gordon has re-emerged as the potential acquirer of the securities division of rival Charles Stanley Group, beating US financial services firm Stifel Financial. In March it transpired that Stifel had entered into exclusive talks to buy the division, which provides corporate finance advice to, and research on, small and mid-sized companies, after outbidding Panmure Gordon. However, Stifel's exclusivity period expired, giving Panmure Gordon another opportunity to acquire the business from Charles Stanley who announced that they have entered into an exclusive heads of terms for the sale of the division.
Also in corporate finance, Peterhouse Corporate Finance acquired Hume Capital Management and Hume Capital (Guernsey), providers of investment management services, from Hume Capital Securities. There was international interest in the sector with Samena Capital buying a stake of up to 31.2% in Kleinwort Benson Bank with an option to increase the interest to 39.9% three years following the transaction. The deal is worth £15m based on Kleinwort's projected net asset value at the end of 2015. Samena Capital is a private equity and credit business whose name derives from its focus on investments in the Subcontinent, Asia, Middle East and North Africa. It is creating an international merchant banking operation to service high net worth individuals and entrepreneurs in both their personal and corporate affairs.
Alliance Trust Savings, a subsidiary of Alliance Trust, acquired the Stocktrade division of Brewin Dolphin, for a consideration of £14m in cash. Stocktrade operates in Edinburgh and provides execution-only trade services. Also in Scotland, Aberdeen Asset Management announced the acquisition of FLAG Capital Management LLC in the USA, which runs $6.3bn of assets focusing on venture capital, private equity and real asset investments.
Elsewhere in the sector, the IFA consolidators continued their acquisition trail. AFH Financial Group acquired Independent Financial Services (UK) Ltd for a maximum consideration of £4.1m. Bellpenny agreed to acquire Rawson Steele and Caledonia Edinburgh, and European Wealth agreed to pay up to £3m to buy financial planning firm Greensnow (trading as ISM Solutions) and launched a £2m share placing to fund further purchases. In a similar consolidation move, Chase Templeton, which provides private medical and protection insurance brokerage services, acquired two businesses: Get Private and Medical Insurance Advisers.
The slowdown in M&A activity in the Investment sector that we have seen over the last four quarters continued this month. Slightly against that trend was the announcement by Charles Stanley Group Plc, the stockbroking, corporate finance and investment management group, to restructure the business, putting up for sale Charles Stanley Securities, its advisory, broking and corporate finance services provider for small and mid-cap public companies, and the management buy-out of Charles Stanley Financial Solutions, its employee benefit solutions provider. It also raised £15.8m net of expenses via the placing of 4.6m new ordinary shares with institutional investors and certain Directors.
Almost all of the other transactions in the sector were in the advisory space, including: Close Brothers acquiring Mackay Stewart & Brown; Almary Green Investments acquired Jones Financial Planning; Bellpenny acquired City Wealth Management Independent Financial Advisers; and Newell Palmer Group acquired Stephen Dagnall Financial Management.
Elsewhere, Personal Group Holdings Plc acquired shebang Technologies Group Ltd, a wholesale distributor of mobile products and solutions, for £1.3m, to establish a Mobile Virtual Network Operator aimed at providing salary sacrifice phones and airtime to its clients through its subsidiary Lets Connect, and SVG Capital, which invests in a portfolio of private equity funds, announced a tender offer to buy back up to £70m of its own shares.
Interest in the investment sector from overseas saw R.J. O’Brien & Associates, the oldest and largest independent futures brokerage and clearing firm in the United States, announce that it will acquire The Kyte Group Limited, which provides clearing and settlement services to professional traders who transact business on the world’s leading exchanges, from GFI Group, and Vontobel Holding AG, the Swiss-based provider of investment banking services, acquired a 60% stake in TwentyFour Asset Management LLP, a provider of independent fixed income asset management services with £4.3bn AUM.
British companies were also active abroad: Royal Bank of Scotland Group agreed to sell the international private banking and wealth management business of Coutts, to Union Bancaire Privee, a Swiss provider of asset management services for private and institutional clients; and Savills, the real estate advisory, management and transactional services provider, entered into an agreement to acquire SEB Asset Management AG in Germany, a provider of real estate investment management services, from Skandinaviska Enskilda Banken of Sweden for a consideration up to €21.5m in cash, to be combined with Cordea Savills, Savills' investment management business.
Back at home, the investment and wealth management sectors continued to be busy with Walker Crips acquiring the London-based Barker Poland Asset Management in a deal worth up to £4.2m. Barker Poland provides investment and wealth management to private clients and has £229m of assets under management, of which £192m are run on a discretionary basis. Aberdeen Asset Management signed a definitive agreement to acquire the remaining 49.9% stake in Aberdeen SVG Private Equity Advisers Ltd, an investor in a portfolio of private equity funds, from SVG Capital, for an expected total of approximately £41m, including dividends. Palatine Private Equity acquired Towergate Financial Planning, AFH Financial Group acquired CIB Wealth Management LLP and Newell Palmer Group Ltd acquired Jenner Financial Management.
Elsewhere in the sector, Bower Retirement Services has completed a deal to acquire equity release adviser Sixty Plus, Chase Templeton Ltd acquired Medins Healthcare Ltd, a provider of health insurance advice services, and advisory specialist AlixPartners completed the acquisition of insolvency and accountancy firm Zolfo Cooper, in a deal understood to be worth up to £65m.
The wealth management sector provided the usual flurry of action in the sector, with Standard Life announcing its entry into financial advisory space with the acquisition of Skipton Building Society’s stake in Pearson Jones, an IFA with c. £1.1bn of client assets. It came shortly after Towry announced its £97m recommended offer for Ashcourt Rowan. In addition, Attivo Group acquired Sanderson Financial Consultancy and AFH Financial Group acquired three firms: Roxborough Consultancy, First Class Financial Management and K.L. Plester Financial Services.
In the related pensions and advisory market, Scottish Friendly Insurance Services Ltd acquired Marine & General Mutual Life Assurance Society, the provider of pension insurance and financial advisory services and, in the fund management sector London Stock Exchange Group confirmed it will sell the Russell Investment Management business, which runs about £150bn of assets and which it acquired as part of last year’s $2.7bn (£1.77bn) purchase of the Frank Russell Company. Man Group Plc agreed to acquire NewSmith Asset Management LLP, a provider of investment management services, from its founders, senior staff members and Sumitomo Mitsui Trust Bank Limited. It was also rumoured that Aegon and Zurich Insurance Group are considering a sale of 7IM, the discretionary fund manager and platform provider which runs c. £7bn of client assets.
Most of the action in January was concentrated in the wealth management sector: Succession Group acquired Finch Financial Services for £3m; Tavistock Investments Plc agreed to acquire Standard Financial Group Ltd, a financial adviser network; Jonathanfry acquired the assets of Norwest Consultants while also undertaking a merger with Easby Gale & Phillipson; and, just after the end of the month, Towry Finance Company made a recommended offer to acquire Ashcourt Rowan Plc, the AIM-listed integrated wealth management group, for cash and loan notes valuing the entire issued and to be issued share capital of the group at approximately £97m.
Elsewhere, Charles Taylor Plc, via Metrowise Ltd, agreed to acquire Scottish Widows International Ltd, Jersey, which provides unit-linked life insurance policies and portfolio bonds toindividual investors, from Scottish Widows for an initial cash consideration of £2m, plus £3m after Scottish Widows International has been re-domiciled to the Isle of Man; with a further £7.5m to be paid following the long-term business transfer. Chase Templeton, the PMI specialist, acquired Best Health Business Ltd, and it was rumoured that Monecor (London) Ltd has proposed to acquire the assets of the failed spread betting firm Alpari (UK) Ltd.