AssetCo has reached an agreement with European private equity firm Preservation Capital Partners to acquire a 30% equity interest in investment and advisory platform Parmenion Capital Partners for up to £27.8m ($38.3m, €32.3m).
This comes hours after Standard Life Aberdeen (SLA) completed the sale of Parmenion to Preservation Capital Partners, a deal which was announced in March.
The 30% stake will be paid in cash, with £20.6m due on completion and up to £3.6m due in each of March 2022 and March 2023. AssetCo will fund the initial consideration for Parmenion from internal cash resources and marketable securities currently held, totalling £31.6m.
The acquisition is conditional on approval by the Financial Conduct Authority (FCA), which is expected to occur by the end of September 2021.
Following completion of the deal, it has been agreed with Preservation Capital Partners that Gordon Neilly, an adviser to AssetCo and former global head of strategy and corporate development at Standard Life Aberdeen, will join the board of Parmenion.
Parmenion manages around £9bn of assets under management and services around 1,100 adviser firms and 2,600 financial advisers. It employs 211 people and is headquartered in Bristol.
Benefits to AssetCo
In January 2021, AssetCo was transformed from a fire engine leasing business into a corporate vehicle for dealmaking in asset management and financial services.
It has been backed by ex-chief executive of Aberdeen Asset Management, Martin Gilbert, and a group of investors, including former Aberdeen Standard Investments global head of private markets Peter McKellar and Toscafund Asset Management.
The AssetCo board believes there are “significant opportunities to develop the business of Parmenion further, both organically and inorganically”, it said in a London Stock Exchange statement.
This includes “deepening its relationship with existing customers and growing its customer base, through on-going technology innovation and by broadening its discretionary fund management and platform offerings to meet customer demand”.
In time, the company said it will “raise additional equity capital further to the permissions granted by shareholders at the general meeting held in April 2021”.
‘Expertise to grow’
McKellar, deputy chairman and chief executive of AssetCo, said: “Parmenion is a market leading investment and advisory platform. The business has a great opportunity to build on its strong IT and client focused foundations, given the digital transformation we are seeing within the asset and wealth management industry.
“The company has the people and expertise to grow and to continue to deliver for advisers and customers, as they seek to achieve their long-term investment objectives.
“Our strategy is to position AssetCo to take advantage of the structural shifts taking place within the asset and wealth management industry, such as the increasing use of technology to help individual investors and their advisers.
“It is intended that this will be achieved through the acquisition, primarily, of majority stakes in selected businesses which play into these structural shifts and supported by strong distribution to drive organic growth.
“Few businesses will divert us from this approach, but we were compelled by Parmenion’s market positioning, strong growth potential and excellent management team and on this occasion we are delighted to have secured a significant minority interest in conjunction with Preservation Capital Partners.”
Standard Life
Also, SLA and Preservation Capital Partners completed the sale of Parmenion.
The transaction results in Preservation acquiring the platform for around £102m.
Stephen Bird, chief executive of Standard Life Aberdeen, said: “The completion of the sale of Parmenion is a step forward in simplifying our business and delivering on our strategy.
“Financial adviser technology will be a key engine of growth in the UK wealth and savings market. By focusing on our wrap and elevate platforms, we are best placed to capitalise on this opportunity.”
“Parmenion has had great success during its time as part of the SLA group and we wish the team well on the next stage of their journey with Preservation.”
