Under the terms of the deal, Momentum, which is the UK arm of South African financial services firm MMI Holdings, will take on immediate responsibility for the investment management of the 15 model portfolios under a sub-investment management agreement. It will assume full responsibility for the Adviser Solutions on 1 July 2016.
According to Ferdi van Heerden, Momentum UK chief executive, the acquisition of a mature DFM offering, as a complement to its unitised Factor Series offering enables the firm to accelerate its growth as an investment solutions provider to the UK adviser market by allowing it to cater to a wider range of adviser needs.
“If you focus on providing investment solutions to advisers, as we do, you need to be able to provide for the needs of different clients. We now have a proposition that can cater for a wide range of IFA’s customer needs. This is an extremely important ability for us to have.”
Broader proposition
Andy Davies head of UK business development at Momentum Global Investment Management added that over time the firm will look to continue to broaden the width of the proposition.
“We will also look to expand the Factor series. We are already said the intention is to build a Factor 6 product, but we are also looking into broadening that range even further into products where the inflation link breaks,” he said.
“The pensions freedoms have unlocked that market for the advisory community and, if you combine that with the fact that people are living longer, it becomes clear that the industry needs to start building longer term income products,” Davies added,
According to the firm it has already spoken to around half of the roughly 220 existing Adviser Solutions clients and the reception has been very positive.
Part of the reason for this is that, “the investment philosophy of the two firms is eerily similar,” van Heerden said, “they have a similar trend line.”
Organic growth
At present the book of business sits at around £200m ($288m, €258m), but van Heerden says over time the target is to grow this to a multiple of that.
Asked if the decision to buy a book of business rather than continue to with its existing organic growth trajectory signalled a shift, van Heerden said the firm continues to focus on organic growth but always has and will continue to balance thamindset against opportunities to accelerate that growth.
For London & Capital, the decision to sell the business came on the back of the strong growth of the firm’s private client and institutional businesses.
“It was a question of focus for us,” Guy McGlashan, London & Capital chief operating officer, told IA’s sister publication Portfolio Adviser.
“It was important to find a partner who shared our ideals and investment philosophy so that we could provide continuity for our IFA clients. The continuity will also be aided by the Adviser Solutions team transferring to Momentum, thus minimising disruption for our IFA relationships and their clients. We shall now focus fully on our private client and institutional businesses, where we are seeing considerable growth,” he said.
As part of the deal, five Adviser Solutions employees will join the Momentum team, two sales people, two sales support and one investment support role.
