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James Hay buys wrap platform for £145m

Combined business will have around £45bn of assets under administration

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Financial services provider James Hay has agreed to acquire Nucleus for a total consideration of £145m ($200m, €165m) after months of speculation surrounding the future of the wrap platform.

The transaction will bring together Nucleus and James Hay to create a UK independent adviser platform with around £45bn of assets under administration (AuA).

It will serve the adviser market with a wide range of financial planning and retirement solutions, including self-invested personal pension (Sipp) and drawdown features, as well as a range of tax wrappers.

Completion date

The Nucleus board has recommended that its shareholders vote in favour of this transaction.

Additionally, its largest shareholder Sanlam UK, which owns 52.19%, along with the board of directors (2.36%) have all agreed to vote in favour of this transaction.

The acquisition is subject to approval by Nucleus shareholders and the Financial Conduct Authority (FCA), and the deal is expected to complete in the second quarter of 2021.

Richard Rowney, chief executive of James Hay said: “We are excited to be announcing the acquisition of Nucleus, which on completion will create one of the leading, independent, adviser platforms, with over £45bn of AuA.

“The two businesses have complementary areas of expertise and common beliefs about the importance of independence and only serving the adviser market.

“We admire much about Nucleus and the skills within its team, and look forward to working with them to better serve the growing needs of advisers.

“By joining forces, we can combine Nucleus’s reputation for great digital user-experience and James Hay’s pension specialism, creating greater strength and a platform with the scale to invest and deliver real value for advisers and their clients.”

Migration

Also, James Hay has entered into a long-term strategic partnership with FNZ for the delivery of platform technology and outsourced administration services.

There will be no immediate change for advisers on either platform, but platform administration services for the combined group will be provided by FNZ over time.

This will be done “in a measured and controlled way to ensure continuity for clients, with the migration of some technology and the platform administration of Nucleus’ assets from the existing arrangements onto FNZ’s technology and operations,” the firms said.

Previous bids

In December 2020, wrap platform Nucleus confirmed press speculation that it was in talks with multiple potential buyers.

These included Integrafin, James Hay, Allfunds and Aquiline Capital Partners.

But in January 2021, International Adviser reported that James Hay was the last firm left in the mix.

David Ferguson, chief executive of Nucleus, added: “Since we launched in 2006 we’ve always put the customer centre stage and while that has made us a little bit different it’s carried us to £17.4bn in AuA and to a point where the sentiment of our users and our people has never been better.

“Becoming part of this enlarged group gives us a key role in a much bigger story where we can create a leading independent platform of scale with a high tech, high touch proposition and philosophy. I think the combination of our people’s talents and the size of the opportunity can see us carefully navigate the roadmap to deliver on this collective medium-term goal.

“I look forward to getting to know our new colleagues and moulding a group culture that is centred on doing the right thing and building a market-defining product that really delivers for advisers and their clients.”

Reaction

Dominic Thomas, founder and principal of IFA firm Solomons, said in a blog post: “Change is unsettling, the reality is that we can never prevent change, we simply must face it. Nucleus is, to be blunt, a rather brilliant company that we have been using for many years.

“The technology works and the culture which in no small part directly derives from David Ferguson have been a beacon in my sector. One of integrity, innovation, and transparency.

“James Hay is a very large financial services company that mainly specialises in pensions. We have always been able to use them for our clients. We review the platforms we use each year and this is based on various criteria from ‘does it work?’ to financial resilience. In truth, it would be improbable that Nucleus remains your platform forever – technology will always evolve.

“On the face of it, this looks like a sensible and good deal, but as always, we will keep things under review. Should we advise something different, we will do so. However, at this stage that would seem highly unlikely. I remain open-minded and aware that change ushers in anxiety. There is nothing significant that has altered but in time we hope for improvements.

“One of the many reasons for selecting Nucleus is that there are no exit penalties. It is my hope that this will simply be nothing more than an advantage. In summary – I am not concerned, if this changes we will make changes – as you would expect.”

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