Investor appetite still positive – Asset & Wealth Management Q2 M&A update
July 26, 2016
Despite a backdrop of economic and political uncertainty, the UK Asset and Wealth Management sector has seen positive levels of mergers and acquisitions (M&A) activity and retains its cautiously optimistic outlook.
UK deal flow as a whole in Q2 2016 saw a significant reduction in activity in comparison with Q1 2016 in anticipation of the EU referendum vote on 23 June. However, despite this material macro uncertainty, this quarter still saw high levels of M&A activity across the UK Asset and Wealth Management (AWM) sector, including a number of material strategic deals.
These deals continue to highlight the impact of key drivers discussed in the Q1 AWM blog within the AWM sector, namely fragmentation, regulation and technology. The transactions also illustrate the strong and growing interest of private equity in the sector and moves from some major corporate players to invest in core areas of growth.
Notable deals this quarter include:
Asset management & discretionary fund management
- Permira-backed Tilney Bestinvest announced the acquisition of Towry for £600 million to create one of the UK’s largest wealth management firms with over £20 billion of assets under management and £200 million of revenue.
- Phoenix Group announced the acquisition Axa Wealth’s pension business, Embassy, and direct protection business, Sunlife, for £375 million, as part of Axa’s strategy to divest its non-core UK operations.
Financial planning / advice
- Standard Life has further accelerated its build of national advice arm, 1825, announcing the acquisitions as regional hubs of London-based Baigrie Davies and Jones Sheridan in the North West, increasing assets under management to over £3 billion.
- Private equity firm Synova Capital made a £25 million commitment to Fairstone Group, allowing Fairstone to accelerate its consolidation strategy and growing its £5.8 billion of assets under management.
- Brown Shipley announced the acquisition of Manchester-based The Roberts Partnership, its second advice business acquisition, as part of its strategy to diversify current service offering.
- Succession has continued its consolidation strategy with the announced acquisition of Caledonia and Michael Moore Life& Pensions.
- SJP has acquired Technical Connection, which includes Techlink Professional, an online knowledge management platform that provides technical support and online tools for advisers and will further the digital evolution of the business. This deal highlights the continuing trend of combining advice and technology to enhance services offered to clients.
- Regional consolidation has also continued with Fidelius’ acquisition of Moneywise, based in Bath.
- Standard Life announced the acquisition of Axa Elevate, adding over £9.8 billion in assets. This deal could mark the first transaction of the much anticipated platform consolidation in the platform space and confirms further non-core divestment from Axa.
Looking forward, although the ongoing macro uncertainty is likely to have a major impact on overall M&A levels of activity, we are still seeing strong investor appetite across private equity and corporates for attractive strategic assets in the AWM sector. We have seen valuations hold firm following a rebound in the UK stock markets. The sector remains calm and the outlook therefore remains one of cautious optimism as the positive market fundamentals and M&A dynamics within the AWM sector remain in place.
Get in touch if you’d like to discuss the dynamics of the market in relation to your situation.