Welcome to IMAS M&A Monthly - March 2017 Join our distribution list
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Highlighting key deals and trends in the UK financial services industry and sent to the industry's top 3,000 CEOs
 
March saw transaction values and volumes in financial services rise, bringing the first quarter of this year close to the last quarter of 2016 on both measures. Against the backdrop of favourable equity markets, private equity funds took the opportunity to place parts of their holdings in publicly listed companies, including several challenger banks, totalling in excess of £350m of realisations. But this was outweighed by a factor of three by well over £1bn being invested by them in fast-growing new businesses in a combination of growth financings and a bid for a public company, the latter of which was jointly presented by a fund that had originally backed the company and exited the investment in connection with the IPO. The consolidation of certain sectors was also noticeable, most strongly manifested in the agreed £11bn merger of Standard Life and Aberdeen Asset Management, raising speculation about other imminent mergers in the asset management space. Away from the public arena and at the smaller end of the scale, the general insurance broking and IFA sectors were the most active in this regard. Thus, in the month when the formal Brexit letter was delivered to the European Council, M&A confidence remained high and funding for growth businesses was readily available in the UK. The industrial logic driving the consolidation of certain sectors and the strategic forces behind the investments in the next generation of financial service businesses have prevailed and continued into April. Should you wish to explore how your business could benefit from the current trends, we would be very pleased to hear from you in complete confidence.
Contacts:


Olly Laughton-Scott
Founding Partner
+44 (0)20 7444 4399
General Insurance
March sprang into action with a series of material transactions. Early in the month Travelers, the US-based insurance group, acquired Simply Business, the online SME commercial insurance platform, for around £400m, from Aquiline Capital who sold it for more than three times the money it invested 10 months ago, and JC Flowers, the private investment firm, acquired UK General, the UK commercial MGA, from Primary Group. Later in the month CFC Underwriting, an MGA, completed a management buy-out of the business backed by Vitruvian and Hannover Re, the German reinsurance group, acquired Lloyd’s managing agent Argenta, securing direct involvement in the Lloyd’s market with Syndicate 2121. Other transactions included Clear Insurance Group, the London-based commercial broker, acquiring MPW Insurance Brokers, a Kent-based commercial broker, Aston Scott, the PE-backed commercial broker, acquired A.H. Bell & Co, a Derby-based commercial broker. Academy, the Reading-based commercial broker, acquired Midlands-based Glynwood Insurance Services, extending its geographic reach, Seventeen Group, the London head office based-commercial broking group, also increased its presence in the borders with the acquisition of Westcott Insurance Brokers in Dumfries and Invicta is acquiring the general insurance portfolio of Priory Brokers. Sompo Holdings has now completed its $6.3bn acquisition of Endurance Speciality, the Bermudan-based commercial insurance and reinsurance business, and will integrate it into the group as Sompo International.
James Simpson
Partner,
General insurance

+44 (0)20 7444 4391
Investment
Standard Life and Aberdeen Asset Management announced that they had reached a recommended all-share £11bn merger deal which would create “a formidable player in the active asset management industry globally” running over £660bn of assets. Under the terms of the merger, the shareholders of Standard Life and Aberdeen Asset Management will end up owning 66.7% and 33.3% of the combined group, respectively. Old Mutual agreed to sell a stake worth £356m in its US asset management business to HNA Capital, a Chinese-owned company, which is expected to help pave the way for a flotation of Old Mutual Wealth. In a similar move, it was reported that Aviva is exploring a sale of its Friends Provident International unit, which provides life assurance and investment products, in a deal that is expected to raise between $500m and $700m. Following the warm reception that the stock market gave Xafinity on its listing on the Main Market of the London Stock Exchange in February, which raised £46.0m for the company and £125.1m for its selling shareholders, including CBPE, and valued the business at a total of £190.3m, two listed wealth managers tapped the stock market for more capital to help finance further acquisitions of businesses: AFH Financial Group and Harwood Wealth raised £10m each which allowed their management teams to sell down some of their holdings in the wake of strong demand. In a similar vein of favourable stock market demand, private equity funds Cinven and Permira offloaded a combined 10.2% stake in JRP Group for a total of £123.5m, leaving the funds with 15.5% and 23.2% stakes, respectively, and K3 Capital Group, a provider of corporate finance and brokerage services, announced that it is seeking an admission to the AIM list of the London Stock Exchange. Atlas Merchant Capital, the US investment firm created by the former Barclays chief executive, Bob Diamond, announced its intention to make an offer for Panmure Gordon, together with QInvest, the investment vehicle controlled by the Qatari royal family which already holds 43% of the mid-market investment bank, valuing it at £15.5m. Elsewhere in the asset management space Dalton Strategic Partnership acquired MSK Capital Partners, a global equities fund manager with £184m of AUM and, in the wealth management sector, Succession acquired member firms Chamber Group, trading as Lewis Chambers, and Plan4Wealth in a deal that values the businesses at more than £10m. Progeny Group, which provides a combination of wealth management and legal advice, agreed to buy Quadrant Group and Fairstone Group acquired minority stakes in Mortgage Find, Campbell Harrison and Pensions & Wealth Management Services. Other deals in the sector included C. Hoare & Co.’s sale of its investment dealing and custody platform to Canaccord Genuity Wealth Management, Embark Group, the owner of Rowanmoor and Hornbuckle, purchase of the discretionary fund management research business Discus and International Medical Group, a US-based provider of health insurance, acquisition of A La Carte Healthcare, a Sussex-based provider of medical insurance.
Fred Hansson
Partner,
Investment

+44 (0)20 7444 4393
Lending
The month concluded with two high-profile announcements: Firstly, UK Asset Resolution announced that Bradford & Bingley had agreed to sell two separate asset portfolios comprising performing buy to let loans for £11.8bn to Prudential and to funds managed by Blackstone; and secondly, the board of Marlin Bidco, a company jointly owned by funds managed or advised by Pollen Street Capital and funds advised by BC Partners announced a cash offer to acquire Shawbrook Group for c. £842m. There was further equity capital markets activity in the banking market with a number of share placings: Funds managed and advised by J.C. Flowers & Co. sold 24.3m shares in OneSavings Bank, representing c. 10% of its share capital, for gross proceeds of c. £96m; AnaCap Financial Partners sold 51.7m shares in Aldermore Group for gross proceeds of c. £113.7m following which AnaCap funds will be interested in c. 25% of its ordinary share capital; and Private & Commercial Finance Group announced that 40.0m new shares had been conditionally placed for gross proceeds of £10m, representing 23.5% of the existing share capital of the company. Elsewhere, HSBC Holdings announced the completion of the sale of two portfolios of predominantly US first lien and second lien residential mortgages for c. $3.4bn and for c. $1.5bn respectively. GLI Finance announced the completion of the secondary placing of its total holding in The SME Loan Fund for gross proceeds of £22.7m. 1PM announced the acquisition of Intelligent Financing, trading as Intelligent Loans, a brokerage engaged in the packaging of secured bridging loans, second charge loans and commercial mortgages for up to £2m.
Tony Green
Partner,
Lending

+44 (0)20 7444 4394
Financial Support Services
Insurance technology was busy in March. The Travelers Companies acquired Simply Business from Aquiline Capital Partners for an enterprise value of approximately £400m, including the repayment of debt and other obligations at closing. Telematics technology provider The Floow received a £13m equity investment to accelerate global growth from China-based investment group Fosun, with investors United Electronics Co, and Direct Line Group also involved in the transaction. CPP Group, the international provider of life assistance products, acquired Blink Innovation, the insurtech start-up targeting the travel insurance space, for an initial consideration of €1m million plus additional compensation of up to €20m based on future product development. In investment technology, DST Systems, the strategic advisory, technology, and operations outsourcing company, announced the acquisition of State Street's ownership interest in the Boston Financial Data Services and International Financial Data Services Limited joint ventures. CBPE Capital invested in Xceptor the process automation and data management business, alongside the existing management team, having acquired a majority stake from SVG Capital. FeedStock, the intelligent information management platform, announced a strategic investment from Illuminate Financial Management and Broadridge Financial Solutions acquired Message Automation to expand its regulatory and compliance capabilities for capital markets firms and investment managers and savings app Squirrel raised £585,000 in a crowdfunding campaign from 70 investors, all through crowdfunding platform SyndicateRoom. The payments sector was also active in March. Currency Cloud, cross border multi-currency payment transfers platform, raised £20.0m in a late stage funding round led by new investor GV with support from existing investors Anthemis, Notion Capital, Rakuten and Sapphire Ventures. The funds will be used to fuel the company’s continued growth and ongoing global expansion. Revolut announced an upcoming £4m crowdfunding round, Apis Growth acquired a non-controlling minority stake in Trans-Fast Remittance, the global payments company, to facilitate its expansion into Africa and Asia while Loyalzoo, the digital loyalty card service for small businesses, received a second investment by a member of Wild Blue Cohort, the angel investor network. Finally, business-to-business payment solutions provider and virtual card specialist Optal announced the acquisition of automated payments company Invapay. Elsewhere, The European Commission has officially blocked the proposed merger between the London Stock Exchange and Deutsche Börse, citing competition concerns. Numerix, the risk technology business, acquired TFG Financial Systems, the real-time risk, P&L and position management system, Freetrade the stock market trading platform secured £1.1m through its second equity crowdfunding campaign on Crowdcube. financial data analytics firm Quantexa raised £3.3m in Series A fundraising led by Albion Ventures and HSBC, RavenPack, the hedge fund big data analytics platform, secured $5m backing from Draper Esprit and consumer finance fintech business Quint Group secured £10m from Tosca Debt Capital to fund its recapitalisation also enabling the CEO to increase his stake to 90%.
Bruce McIntyre
Partner,
Financial support services

+44 (0)20 7444 4395