This month saw activity in most parts of the investment sector, including: BGC, the US interdealer broker, bought the London-based assets of RP Martin, the wholesale broking firm, and agreed to buy the group’s subsidiaries in Sweden and the Netherlands from Gresham Private Equity; RIT Capital Partners plc entered into an agreement to acquire GVO Investment Management Limited, a specialist fund manager with c. £350m AUM, running the GVO UK Focus Fund and Strategic Equity Capital plc, a London-listed investment trust, from Hansa Aktiengesellschaft; Lloyds Banking Group put its Isle of Man offshore investment and tax planning business, Clerical Medical International, up for sale; Teachers Provident Society proposed to transfer its business toLiverpool Victoria Friendly Society (also known as LV=); and Smith & Williamson Holdings Ltd made a tender offer to acquire up to 5.7m ordinary shares, representing approximately 9% of the issued share capital of Cenkos Securities Plc, the specialist securities firm.
Bellpenny acquired Unizone, an IFA with £330m of client assets under advice. The private medical insurance specialist, Chase Templeton, acquired Private Medical Advisors Ltd, JVA Healthcare Services Ltd and the SME PMI book of Ludlow Wealth Management Group. Begbies Traynor, the insolvency practitioner, acquired the chartered surveyors Eddisons.
Man Group had a busy month in the US, agreeing to acquire Silvermine Capital Management, a US leveraged loan manager with $3.8bn AUM and announcing that it is to acquire the investment management contracts from Merrill Lynch Alternative Investments totalling $1.2bn. Further afield,Aviva Investors sold its Asia Pacific real estate fund range to JPMorgan AssetManagement. Chesnara agreed to acquire the Dutch Waard Group from DSB Beheer for €67.8m plus a deferred performance related consideration of up to €2.5m.
Two key and previously announced deals were approved: Leading institutional investors in Aviva and Friends Life Group signalled qualified support for the merger of the two insurers that will create the largest insurance, savings and asset management group in the UK; and members of Engage Mutual Assurance voted in favour of a proposed merger with Family Investments to form one of the largest mutual insurers in the UK with approximately £6bn of assets under management.
The highest profile M&A announcement in the sector this month was Aviva and Friends Life Group reaching an agreement on a possible all share combination. Under the terms of the offer, Aviva would acquire Friends Life for approximately £5.6bn, representing a 15% premium to the three month average share price of Friends Life prior to the announcement, and Friends Life’s shareholders would own approximately 26% of the enlarged group.
Elsewhere in the investment management and protection policies space,Discovery Group Europe Ltd, a subsidiary of Discovery Holdings Ltdin South Africa, agreed to acquire the remaining 25% equity shareholding in thePruHealth and PruProtect Joint Venture held by Prudential Plc, for £115m, and Fleming Family & Partners and Stonehage announced their merger to form the largest independent multi-family office in EMEA serving over 250 families with over $43bn in assets under administration, including $11bn in assets under management.
The IFA sector saw a number of deals, including: AFH Financial Group boughtKnight O’Byrne; Punter Southall acquired Blacktower Financial Advisers; and Birchwood Investment Management merged with NLP Financial Management to create a group which advises 2,000 clients with £550m of investible assets. In a related sector, Curtis Banks bought Pointon York’s SIPP business.
Almost all of the action this month took place in the investment management arena. Old Mutual agreed to acquire Quilter Cheviot Ltd from private equity funds advised by Bridgepoint Advisers for £585m in what is one of the largest transactions in the sector this year. Premier Asset Management’s chairman, Mike Vogel, bought another 25.1% of the company through Elcot Capital fromElectra Private Equity via the exercise of an option and the financial planning business of Truestone Impact Investment Management was acquired by the founder of Bestinvest, John Spiers. Octopus Investments bought healthcare real estate investment manager MedicX Holdings, with £700m of AUM, from funds advised by Cabot Square Capital and Amlin agreed to increase its stake to 75% in Leadenhall Capital Partners, the insurance focused investment manager.
Elsewhere, it was announced that Haitong International Securities Group Ltdis in discussions to acquire Japaninvest Group Plc, a provider of research brokerage services for Asian securities and whose largest shareholder is Societe Generale. GAIN Capital Holdings Inc. entered an agreement to acquire City Index, the online spread betting company, for US$118m from IPGL, the private holding company for the interests of Michael Spencer, the founder of ICAP.
Family Assurance Friendly Society (trading as Engage Mutual) announced that the board has recommended a merger with Homeowners Friendly Society (trading as Family Investments) to form one of the largest mutual insurers in the UK with approximately £6bn of assets under management and over two million customers.
In the wealth management space it was announced that Openwork, the IFA network, will take control of Metlife’s network of 930 protection advisers. Thomas Miller Investment agreed to buy Broadstone Wealth Management, creating a combined group with c. £2.8bn of assets under management. Barnett Waddingham bought the SIPP and SSAS business from Chase de Vere Independent Financial Services and Bellpenny acquired Reid Scott & Ross in Glasgow. Key Retirement Solutions took a majority stake in fixed-term annuity provider Primetime Retirement.
In a move away from capital-intensive life assurance to focus on pure asset management, Standard Life agreed to dispose of its Canadian business for £2.2bn to Manulife, releasing capital for the potential continuation of the transition after returning capital to its shareholders.
Intermediate Capital Group acquired the remaining 49% stake in Longbow Real Estate Capital that it does not already own for a total of £37m and Guggenheim Securities signed an agreement to acquire the London operations of Lazard Capital Markets.
The largest deal to be announced this month in the investment sector was American International Group Inc. agreeing to acquire Ageas Protect Ltd, a provider of long term insurance life protection products, from Ageas SA/NV, for a consideration of £181m. In fund management, Elcot Capital Management bought a 25.1% stake in Premier Asset Management from Electra Private Equity with an option to acquire a further 25.1% in the future.
We saw continued consolidation in the IFA industry. In its largest acquisition to date, Bellpenny agreed to buy Torquil Clark Holdings Ltd, with over £900m of client assets, from Skipton Building Society and Somerville Financial Services bought the IFA arm of James Hallam.
In the pensions advisory and administration sector, Willis Group bought IFG Group’s Irish business, Barnet Waddingham acquired Harsant Pensions and Dentons bought the SIPP book of MAB Pensions.
Perhaps the most noteworthy transaction in the Investment sector in July was Legg Mason Asset Management agreeing to acquire the 130-year old Martin Currie Investment Management which had £5.8bn AUM at 30 June 2014. TD Banking Group bought out Royal Bank of Scotland's 50% stake in the NatWest execution only stockbroking arm after a 12-year joint venture and Arbuthnot Banking Group agreed to sell its structured products business by the next quarter of this year.
In the advisory market, AJ Gallagher, via its subsidiary Gallagher Employee Benefits, acquired the assets of Baker Tilly Employee Benefits and AJ Gallagher also sold Oval Financial Services' SSAS business, which it acquired earlier this year, to Talbot & Muir. Punter Southall Health & Protection, a subsidiary of Punter Southall Group, agreed to acquire Private Health Partnership, private health insurance adviser and broker, from Skipton Building Society.
The IFA sector saw two consolidators continuing their acquisition trails, including Succession Group acquiring LRH Wealth Management and Doe & Davies, and AFH Financial acquiring Finlay Gow & Company.
Similar to the developments in May, June was dominated by British fund management group’s acquisitions in North America: London Stock Exchange Group announced that it plans to acquire Russell Investments, with approximately £150bn of AUM and a further £3trn of assets benchmarked to the Russell indices, from Northwestern Mutual Life Insurance Co, for a cash consideration of £1.6bn ($2.7bn); Henderson Global Investors acquired Geneva Capital Management, a mid and small cap equities specialist with $6.3bn of AUM, paying an initial $130m plus an additional $70m linked to performance-related measures; Man Group agreed to acquire Pine Grove Asset Management, a specialist manager in credit-focused hedge fund portfolios with c. $1bn AUM; and GAM, which is Swiss-owned but has substantial operations in the UK, acquired Singleterry Mansley Asset Management, a US mortgage and asset-backed securities specialist firm.
Onshore in the UK, there was also activity in the sector: River and Mercantile, the merged asset management and pension consultancy, listed on the London Stock Exchange with a valuation of £150m; Miton Group plc agreed to acquire Darwin Investment Managers for a combination of cash and Miton shares; and Marwyn Management Partners announced a debt for equity swap and a placing to raise £5m.
Elsewhere in the sector, Equiniti agreed to acquire the assets of execution-only stockbroking platform Selftrade which has 130,000 clients and £4.2bn of client assets and Nutmeg, the direct-to-consumer investment platform raised £18.86m from a number of investors. Clearwater Corporate Finance announced the merger with two European advisory firms, Advizer K/S in Denmark and IMAPLynx in Spain and Portugal, and Optima Worldwide Group acquired Fox-Davies Capital, a provider of strategic and advisory equity solutions for £4m.
In the IFA sector Perspective Financial Group raised £6m from its key shareholders and 20 independent financial advisers of the firm to repay debt and finance deferred consideration payments for businesses bought. European Wealth acquired Compass Financial Benefits, Sterling McCall Wealth Management bought Bromley & Co and Meridian Financial Management, Bradbury Hamilton acquired SBB Consulting in Leeds and it was rumoured that Oakley Capital is looking to sell the national IFA, Broadstone Pensions and Investments, and that Towry is one possible buyer for the business. Also, The Timebank acquired another outsourced paraplanning firm, Paraplain.
This month was marked by British fund managers and life assurers being active abroad, including: Legal & General completing the purchase of Global Index Advisors for a potential total of $50.4m and it was confirmed that Man Group is in talks to acquire Boston-based equity trader Numeric Holdings, which manages $13.9bn. There were rumours of Friends Life closing in on its £400m sale of Lombard International Assurance, a provider of wealth structuring services, with Blackstone, Philadelphia Financial and Permira showing interest in the opportunity.
Flows also went the opposite way with overseas groups acquiring in the UK (albeit via existing onshore subsidiaries): Stifel Financial Corp, the US investment bank, agreed to acquire Oriel Securities Holdings; Arthur J Gallagher & Co acquired Shilling Ltd, a provider of employee communication consultancy services; Old Mutual Wealth bought out Henderson’s stake in its multi-manager Cirilium joint venture with network Intrinsic; and MMI Holdings, a subsidiary in the South African group Momentum, acquired Blue Speck Financial Ltd, also known as YourWealth.co.uk
Elsewhere in the investment sector we learnt that the London Stock Exchange Group has entered into exclusive talks to acquire Russell Investments from Northwestern Mutual Life Insurance. River & Mercantile Group is looking to float 40% of its share capital on the LSE in connection with a placing of new equity and a partial sale by Punter Southall and Pacific Investments of their holdings in the company. Tavistock Investment Plc agreed to acquire County Life & Pensions, which owns the Sterling McCall wealth management network, for £7.35m and Blacksquare Ltd for £1.0m plus a deferred consideration. Bellpenny acquired Hansen Lloyd Asset Management and Succession announced the acquisitions of two member firms, Cornerstone Lifestyle Financial Planning and Hopkinson Associates, for £3m. BP Marsh & Partners sold their investment in Portfolio Design Group International Ltd, a purchaser, vendor and provider of valuations of secondary life policies. Towry signed a new financing agreement worth £70m with GE Capital, HSBC and RBS to reduce its cost of capital and help fund new acquisitions and London Capital Group Holdings Plc, a provider of spread betting services, announced a proposed placing of convertible loan notes of approximately £15m. Finally, JLT Employee Benefits (JLT EB) has bought Ensign Pensions Administration from the Merchant Navy Officers Pension Fund (MNOPF) for £10m.
The wealth management industry in the UK continues to consolidate. Among the discretionary portfolio managers Rathbone Brothers agreed to buy Jupiter Asset Management’s private client business, with £2.1bn of client assets, for a maximum of £43.1m. Rathbones also agreed to buy Tilney’s London-based private client arm from Deutsche Bank for £14.3m. Ingenious Asset Management and Thurleigh Investment Managers announced an agreement to merge their businesses and Brooks Macdonald Group acquired DPZ Capital in Jersey for a total of up to £10.8m.
In one of the largest deals this year in the advisory market, Towry bought the assets of Baker Tilly’s private client private client financial advice and investment management business which advises more than 4,500 private clients with over £1.5bn of assets. Ashcourt Rowan completed the acquisition of UK Wealth Management and Attivo Group acquired IFA firm Anthony Etkind & Co. GAIN Capital Holdings, a US provider of online foreign exchange trading services, acquired Galvan Research & Trading, a provider of financial advisory services specialising in the CFD sector.
Similarly, the fund management sector saw City Financial buying the Ucits fund business Iveagh with c. £200m AUM, Affiliated Managers Group announcing that it will acquire a majority stake in Veritas Asset Management, a global and Asian equity manager with c. £10bn AUM and Marshall Wace acquired a majority stake in New York-based Eaglewood Capital Management, specialising in the online lending market.
In life assurance and related areas, Chase Templeton acquired SJS Healthcare Associates and Chartered Life. Aviva sold it 47% stake in the South Korean Woori Aviva Life Insurance to Nong Hyup Financial Group.
The investment management sector continued to see high-profile M&A activity. This month Phoenix Group Holdings agreed to sell Ignis Asset Management, one of the top 15 UK asset managers with £59bn assets under management, to Standard Life Investments, the fund management division of Standard Life, for £390m. Sigma Capital Group raised £8m via a placing of new ordinary shares. Jon Moulton, the founder of the venture capital fund adviser, Better Capital, bought a stake in Seneca Investment Managers, the fund management firm of Seneca Partners (also mentioned below). In the sector overseas, Old Mutual announced that it intends to sell its German and Austrian operations, with combined assets under management of €4.9bn, to an acquisition vehicle owned by the German life group Hannover Re and private equity firm Cinven for €220m.
We also saw somewhat larger deals in the financial advisory space, albeit on a relatively modest size compared to the fund management sector. Ascot Lloyd agreed to buy the non-core IFA subsidiaries, IFG Financial Services, John Siddalls and Berkeley Jacobs, of IFG Group for an initial consideration of £3.5m plus £5.6m depending on the businesses’ future performance. Punter Southall Group acquired a minority stake in Argentis Financial Group and formed a strategic partnership with the business. Bellpenny acquired MDM Associates and boosted its assets under advice by £322m. Bellpenny also bought Personal & Corporate Financial Solutions and St James’s Place acquired Henley Group, an international IFA based in Hong Kong.
In other areas of the sector, JPMorgan has agreed to sell its physical commodities business to Mercuria, the Geneva-based trading house, for $3.5bn and Octagonal Plc bought a 9.97% stake in Global Investment Strategy. Aon announced that it had agreed to acquire Lorica Employee Benefits and, in PMI broking, Chase Templeton acquired Health Assist. In corporate finance, Seneca Partners acquired Acceleris.
In the investment management space, the long-awaited acquisition of Tilney from Deutsche Bank by Permira finally reached agreement. Permira plans to merge the business with Bestinvest, in which it recently invested. River and Mercantile Asset Management announced plans to merge with the investment consultancy P-Solve, a subsidiary of Punter Southall. The combined group may explore the possibility of an IPO to raise capital for growth. La Francaise AM SA agreed to acquire a 40% stake in Tages Capital LLP.
It was somewhat quieter in the IFA sector this month. SPF Private Clients acquired Wiltshire & Co. and LEBC secured a £2m investment from BP Marsh & Partners in exchange for 12% of the equity and a debt facility.
Elsewhere, MetLife agreed to sell its bulk annuity business to Rothesay Life and two major groups in the sector were active abroad. Legal & General acquired Global Index Advisors in the USA for up to $50.4m and St. James’s Place revealed that it is in advanced talks to acquire Henley Group, an international financial advisory firm with offices in Shanghai, Singapore and Hong Kong.
Interest in the investment sector from overseas manifested itself in a series of announcements this month. Bank of Montreal Financial Group made an indicative offer to acquire the entire share capital of F&C Asset Management Plc for a total cash payment of £708m. This could potentially become the largest deal for over three years in the UK fund management industry and would mark the second transaction in the last three months to exceed £0.5bn in value in the sector (following Aberdeen Asset Management’s acquisition of Scottish Widows Investment Partnership in November).
North American interest in Europe was also strong in exchange traded product providers. WisdomTree Investments of the USA agreed to take a 75% stake in Boost ETP for injecting $20m into the business and private equity firm Warburg Pincus acquired a majority stake in Source.
Industrial and Commercial Bank of China Ltd, the Chinese state-owned banking group, agreed to acquire a 60% stake in Standard Bank Plc, the London-based global markets subsidiary of Standard Bank Group Ltd, South Africa, focusing on commodities, fixed income, currencies, credit and equities, for an estimated consideration of $765m with an option to acquire a further 20% over the next five years. VTB Capital of Russia acquired a 9% stake in Eidos Partners Holdings, a London-based provider of corporate finance and investment advisory services.
Elsewhere in investment management, Jupiter revealed that it is considering the sale of its wealth management arm following an unsolicited bid for the business. Rathbones, Towry and Quilter have been rumoured as interested parties. Miton Group agreed to sell its Liverpool-based fund management business to Seneca Partners Group for up to £6.4m.
We saw continued interest from private equity in the retail financial advisory market as Inflexion Private Equity took a 50.1% stake in Succession Group, providing funding for further acquisitions of IFAs by the group. Other consolidators in the sector were also active, including Bellpenny, who acquired a combined £187m of client assets from Actuarial & Investment Services and The Hammond Consultancy, and AFH Financial acquired SR Wealth Management. Davy Private Clients bought Square Seven Financial Planning in Belfast.